Stochastic dominance spanning and augmenting the human development index with institutional quality

MEHMET PINAR*, Thanasis Stengos, Nikolas Topaloglou

*Corresponding author for this work

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Abstract

The well-known Human Development Index (HDI) goes beyond a single measure of well-being as it is constructed as a composite index of achievements in education, income, and health dimensions. However, it is argued that the above dimensions do not reflect the overall well-being, and new indicators should be included in its construction. This paper uses stochastic dominance spanning to test the inclusion of additional institutional quality (governance) dimensions to the HDI, and we examine whether the augmentation of the original set of welfare dimensions by an additional component leads to distributional welfare gains or losses or neither. We find that differently constructed indicators of the same institutional quality measure produce different distributions of well-being.
Original languageEnglish
JournalAnnals of Operations Research
Early online date13 Apr 2022
DOIs
Publication statusPublished - 13 Apr 2022

Keywords

  • Well-being
  • Human development
  • Institutions
  • Stochastic dominance

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