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Using Spatial Factor Analysis to Measure Human Development

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  • Qihua Qiu
  • Jaesang Sung
  • Will Davis
  • Rusty Tchernis

Abstract

We propose a Bayesian factor analysis model as an alternative to the Human Development Index (HDI). Our model provides methodology which can either augment or build additional indices. In addition to addressing potential issues of the HDI, we estimate human development with three auxiliary variables capturing environmental health and sustainability, income inequality, and satellite observed nightlight. We also use our method to build a Millennium Development Goals (MDG) index as an example of constructing a more complex index. We find the “living standard” dimension provides a greater contribution to human development than the official HDI suggests, while the “longevity” dimension provides a lower proportional contribution. Our results also show considerable levels of disagreement relative to the ranks of official HDI. We report the sensitivity of our method to different specifications of spatial correlation, cardinal-to-ordinal data transforms, and data imputation procedures, along with the results of a simulated data exercise.

Suggested Citation

  • Qihua Qiu & Jaesang Sung & Will Davis & Rusty Tchernis, 2017. "Using Spatial Factor Analysis to Measure Human Development," NBER Working Papers 23952, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:23952
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    1. Will Davis & Alexander D. Gordan & Rusty Tchernis, 2020. "Measuring the Spatial Distribution of Health Rankings in the United States," NBER Working Papers 27259, National Bureau of Economic Research, Inc.
    2. Mehdi Jabbari & Majid Shafiepour Motlagh & Khosro Ashrafi & Ghahreman Abdoli, 2020. "Differentiating countries based on the sustainable development proximities using the SDG indicators," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 22(7), pages 6405-6423, October.
    3. Yusheng Kong & Peter Yao Lartey & Fatoumata Binta Maci Bah & Nirmalya B. Biswas, 2018. "The Value of Public Sector Risk Management: An Empirical Assessment of Ghana," Administrative Sciences, MDPI, Open Access Journal, vol. 8(3), pages 1-18, July.

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    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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