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An Alternative Approach to Measure HDI

Author

Listed:
  • Hippu Salk Kristle Nathan

    (Indira Gandhi Institute of Development Research)

  • Srijit Mishra
  • B. Sudhakara Reddy

Abstract

The popularly known Human Development Index (HDI) is obtained through linear averaging (LA) of indices in three dimensions - health, education and standard of living. LA method assumes perfect substitutability among the indices. We question its appropriateness and propose an alternative measure, which is the inverse of the Euclidian distance from the ideal. Following Zeleny (1974), we refer to this, as the Displaced Ideal (DI) method. Through an axiomatic characterization, the paper shows that the advantages in the DI method are the following. Uniform, as against skewed, development is rewarded. Through an ideal path, it signals a future course of action. These signify that a given increment in any one dimension, with other dimensions remaining constant, has a greater significance for the index at a lower level than at a higher level. In other words, stagnancy in the dimension that has a lower value is more serious than stagnancy in other dimensions. Finally, an empirical illustration has been done by taking the statistics in Human Development Report 2006. We strongly propose that the DI method be considered over the LA method in the construction of HDI.

Suggested Citation

  • Hippu Salk Kristle Nathan & Srijit Mishra & B. Sudhakara Reddy, 2008. "An Alternative Approach to Measure HDI," Microeconomics Working Papers 22403, East Asian Bureau of Economic Research.
  • Handle: RePEc:eab:microe:22403
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    Cited by:

    1. Nayak, Purusottam & Mishra, SK, 2012. "Efficiency of Pena’s P2 Distance in Construction of Human Development Indices," MPRA Paper 39022, University Library of Munich, Germany.
    2. repec:spr:jsecdv:v:19:y:2017:i:1:d:10.1007_s40847-017-0043-1 is not listed on IDEAS
    3. Hippu Salk Kristle Nathan & Srijit Mishra, 2010. "Progress in human development: Are we on the right path?," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 3(3), pages 199-221.
    4. Jeni Klugman & Francisco Rodríguez & Hyung-Jin Choi, 2011. "The HDI 2010: new controversies, old critiques," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 9(2), pages 249-288, June.
    5. Issaka Dialga, 2016. "L'Indice du Développement Humain ou l'indice monétaire de développement ? Evidences par l’Analyse en Composantes Principales," Working Papers hal-01308724, HAL.
    6. Srijit Mishra & Hippu Salk Kristle Nathan, 2008. "On a Class of human development index measures," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2008-020, Indira Gandhi Institute of Development Research, Mumbai, India.
    7. Srijit Mishra & Hippu Slak Kristle Nathan, 2013. "Measuring human development index: The old, the new and the elegant," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2013-020, Indira Gandhi Institute of Development Research, Mumbai, India.
    8. Issaka Dialga, 2017. "A Sustainability Index of Mining Countries," Working Papers halshs-01500643, HAL.
    9. Nayak, Purusottam, 2013. "Methodological Developments in Human Development Literature," MPRA Paper 50608, University Library of Munich, Germany.

    More about this item

    Keywords

    Displaced ideal; Euclidian distance; Ideal point; Linear averaging; Uniform development;

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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