On the Optimal Construction of the Human Development Index

Mehmet Pinar; Thanasis Stengos; Nikolas Topaloglou

On the Optimal Construction of the Human Development Index

Mehmet Pinar, Thanasis Stengos, Nikolas Topaloglou

Business School

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Abstract

We consider the optimality of the weighting scheme used to construct the Human Development Index (HDI) using an approach that relies on consistent tests for stochastic dominance efficiency. We consider consistent tests for stochastic dominance efficiency of a given index portfolio with respect to all possible indices constructed from a set of individual components. The test statistics and the estimators are computed using mixed integer programming methods. The results show that the equally weighted (fixed weights) HDI index is not optimal and that education by itself offers the best (optimal) indicator of welfare.

Original language	English
Publication status	Published - 2009
Event	64th European Meeting of the Econometric Society - Barcelona, Spain Duration: 23 Aug 2009 → 27 Aug 2009

Conference

Conference	64th European Meeting of the Econometric Society
Country/Territory	Spain
City	Barcelona
Period	23/08/09 → 27/08/09

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title = "On the Optimal Construction of the Human Development Index",

abstract = "We consider the optimality of the weighting scheme used to construct the Human Development Index (HDI) using an approach that relies on consistent tests for stochastic dominance efficiency. We consider consistent tests for stochastic dominance efficiency of a given index portfolio with respect to all possible indices constructed from a set of individual components. The test statistics and the estimators are computed using mixed integer programming methods. The results show that the equally weighted (fixed weights) HDI index is not optimal and that education by itself offers the best (optimal) indicator of welfare.",

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AU - Pinar, Mehmet

AU - Stengos, Thanasis

AU - Topaloglou, Nikolas

PY - 2009

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N2 - We consider the optimality of the weighting scheme used to construct the Human Development Index (HDI) using an approach that relies on consistent tests for stochastic dominance efficiency. We consider consistent tests for stochastic dominance efficiency of a given index portfolio with respect to all possible indices constructed from a set of individual components. The test statistics and the estimators are computed using mixed integer programming methods. The results show that the equally weighted (fixed weights) HDI index is not optimal and that education by itself offers the best (optimal) indicator of welfare.

AB - We consider the optimality of the weighting scheme used to construct the Human Development Index (HDI) using an approach that relies on consistent tests for stochastic dominance efficiency. We consider consistent tests for stochastic dominance efficiency of a given index portfolio with respect to all possible indices constructed from a set of individual components. The test statistics and the estimators are computed using mixed integer programming methods. The results show that the equally weighted (fixed weights) HDI index is not optimal and that education by itself offers the best (optimal) indicator of welfare.

UR - http://www.econometricsociety.org/pastmeetings.asp

M3 - Paper

T2 - 64th European Meeting of the Econometric Society

Y2 - 23 August 2009 through 27 August 2009

ER -

On the Optimal Construction of the Human Development Index

Abstract

Conference

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