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A Latent Variable Mimic Approach To Inferring The Quality Of Life

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  • Rahman, Tauhidur
  • Mittelhammer, Ronald C.
  • Wandschneider, Philip R.

Abstract

This paper makes three principal contributions. First, we propose a new estimator for the unobservable variable models with endogenous causes. We show that under factor analysis type of assumptions, Robinson and Ferrara (1977)'s procedure is not fully efficient, and a more efficient procedure can be obtained by merging Robinson and Ferrara' procedure with that in Joreskog and Goldberger (1975) procedure. The asymptotic properties of the new estimator are compared with these two estimators and results indicate that, with our mixture approach, significant efficiency gains can be achieved. Second, we model the Quality of life (QOL) as an unobservable or latent link variable between observable causes and observable effects, which mitigates problem of bias, inconsistency, and arbitrary weightings of explanatory factors. Third, we estimate and compare QOL indices for 43 countries for the year 1990s, noting differences between countries and over time.

Suggested Citation

  • Rahman, Tauhidur & Mittelhammer, Ronald C. & Wandschneider, Philip R., 2004. "A Latent Variable Mimic Approach To Inferring The Quality Of Life," 2004 Annual meeting, August 1-4, Denver, CO 20351, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea04:20351
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    File URL: http://ageconsearch.umn.edu/record/20351/files/sp04ra01.pdf
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    References listed on IDEAS

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    2. Hartwick, John M, 1994. " National Wealth and Net National Product," Scandinavian Journal of Economics, Wiley Blackwell, vol. 96(2), pages 253-256.
    3. Goldberger, Arthur S, 1972. "Maximum-Likelihood Estimation of Regressions Containing Unobservable Independent Variables," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 13(1), pages 1-15, February.
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    5. Desai, Meghnad, 1991. "Human development : Concepts and measurement," European Economic Review, Elsevier, vol. 35(2-3), pages 350-357, April.
    6. Zellner, Arnold, 1970. "Estimation of Regression Relationships Containing Unobservable Independent Variables," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 11(3), pages 441-454, October.
    7. D. N. Rao & R. L. Bhat, 1991. "Estimation of A Community Health Status Index on the Basis of a MIMIC Model," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 26(1), pages 51-63, January.
    8. Ravallion, Martin, 1997. "Good and bad growth: The human development reports," World Development, Elsevier, vol. 25(5), pages 631-638, May.
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    11. Ram, Rati, 1982. "Composite indices of physical quality of life, basic needs fulfilment, and income : A principal component representation," Journal of Development Economics, Elsevier, vol. 11(2), pages 227-247, October.
    12. Van Vliet, ReneC. J. A. & Van Praag, Bernard M. S., 1987. "Health status estimation on the basis of MIMIC-health care models," Journal of Health Economics, Elsevier, vol. 6(1), pages 27-42, March.
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