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Human Development Index: Are Developing Countries Misclassified? (former title: "Consequences of Data Error in Aggregate Indicators: Evidence from the Human Development Index)

  • Wolff, Hendrik
  • Chong, Howard
  • Auffhammer, Maximilian

This paper examines the consequences of data error in data series used to construct aggregate indicators. Using the most popular indicator of country level economic development, the Human Development Index (HDI), we identify three separate sources of data error. We propose a simple statistical framework to investigate how data error may bias rank assignments and identify two striking consequences for the HDI. First, using the cutoff values used by the United Nations to assign a country as ‘low’, ‘medium’, or ‘high’ developed, we find that currently up to 45% of developing countries are misclassified. Moreover, by replicating prior development/macroeconomic studies, we find that key estimated parameters such as Gini coefficients and speed of convergence measures vary by up to 100% due to data error.

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File URL: http://purl.umn.edu/49763
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Paper provided by Agricultural and Applied Economics Association in its series 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin with number 49763.

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Date of creation: 2009
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Handle: RePEc:ags:aaea09:49763
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  1. Arcelus Francisco J & Sharma Basu & Srinivasan Gopalan, 2005. "Foreign Capital Flows and the Efficiency of the HDI Dimensions," Global Economy Journal, De Gruyter, vol. 5(2), pages 1-14, June.
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  8. Leandro Prados de la Escosura, 2007. "International inequality and polarization in living standards, 1870-2000 : evidence from the Western World," Working Papers in Economic History wp07-05, Universidad Carlos III, Instituto Figuerola de Historia y Ciencias Sociales.
  9. Danny Quah, 1996. "Twin peaks : growth and convergence in models of distribution dynamics," LSE Research Online Documents on Economics 2278, London School of Economics and Political Science, LSE Library.
  10. Guindon, G. Emmanuel & Boisclair, David, 2003. "Past, Current and Future Trends in Tobacco Use," University of California at San Francisco, Center for Tobacco Control Research and Education qt4q57d5vp, Center for Tobacco Control Research and Education, UC San Francisco.
  11. Desai, Meghnad, 1991. "Human development : Concepts and measurement," European Economic Review, Elsevier, vol. 35(2-3), pages 350-357, April.
  12. Quah, Danny T, 1996. "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics," Economic Journal, Royal Economic Society, vol. 106(437), pages 1045-55, July.
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  15. Baliamoune-Lutz, Mina N., 2004. "On the Measurement of Human Well-being: Fuzzy Set Theory and Sen's Capability Approach," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  16. Noorbakhsh, Farhad, 2006. "International Convergence or Higher Inequality in Human Development? Evidence for 1975 to 2002," Working Paper Series RP2006/15, World Institute for Development Economic Research (UNU-WIDER).
  17. Farhad Noorbakhsh, 1998. "The human development index: some technical issues and alternative indices," Journal of International Development, John Wiley & Sons, Ltd., vol. 10(5), pages 589-605.
  18. Tomson Ogwang, 2000. "Inter-country inequality in human development indicators," Applied Economics Letters, Taylor & Francis Journals, vol. 7(7), pages 443-446.
  19. J. Ram Pillarisetti, 1997. "An empirical note on inequality in the world development indicators," Applied Economics Letters, Taylor & Francis Journals, vol. 4(3), pages 145-147.
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