Achieving Higher Outcomes in Human Development: Explicit and Implicit Weights of Different Welfare Dimensions.

It has been long argued that the GDP itself cannot serve as an indicator of well-being solely, which led to the construction and use of multidimensional well-being and sustainability indices. The Human Development Index (HDI) has been one of the first attempts to go beyond single measure of well-being comparisons and offer a multidimensional well-being measure by obtaining a composite index of education, income and health indices. Yet, many still argue that dimensions covered by the HDI do not reflect overall well-being of societies and new indicators should be added to the overall multidimensional well-being index. If new set of indicators are added to the existing indicator set, policy makers need to make a judgement call about the importance attached to new and existing indicators (i.e., explicit weights). However, different normalization procedures of these indicators lead to implicit weights that are different than that of explicit weights. This paper evaluates all possible weight allocation to dimensions and analyzes the weight allocation to the dimensions in the new official HDI with inclusion of the institutional quality dimension.