Human Development Over Time: An Empirical Comparison of a Dynamic Index and the Standard HDI
- 235 Downloads
This research uses panel data to explore inferences about human development associated with two different formulations of the Human Development Index (HDI). The first is the standard HDI as computed since the 2010 Human Development Report. The second is based on a linear combination of the core dimensions, with the weights determined by a dynamic factor analysis algorithm called the Two Cycle Conditional Expectation Maximization algorithm. This algorithm is able to exploit all of the cross sectional and temporal information in a panel dataset and is specifically designed to handle panels with short time dimensions. The two HDI specifications are employed as dependent variables in mixed effects models to estimate the rates-of-change of the HDI by groups of countries classified by income and region. Then, a Monte Carlo simulation is run to assess the efficacy of the two methods in detecting turning points in the trajectories of simulated “true measures” of human development. The results show that, with the exception of low income countries, the two HDI measures give rates of change estimates that do not differ statistically. However, the dynamic HDI does better at detecting the presence of turning points in the trajectory of human development.
KeywordsHuman Development Index Dynamic factor analysis Monte Carlo simulation
We would like to thank the editor, Dr. Filomena Maggino, as well as three anonymous reviewers for their helpful feedback.
- Biswas, B., & Caliendo, F. (2002). A multivariate analysis of the human development index. Economics Research Institute Study Paper (pp. 1–16). Retrieved http://digitalcommons.usu.edu/eri/244. Accessed 17 May 2018.
- Geweke, J. (1977). The dynamic factor analysis of economic time-series model. In Latent variables in socio-economic models. Amsterdam: North-Holland.Google Scholar
- International Monetary Fund (2017). Fostering inclusive growth: G-20 leaders’ summit. Hamburg, Germany. https://www.imf.org/external/np/g20/pdf/2017/062617.pdf. Accessed 17 May 2018.
- Orme, W. (2014). Consistency of human development indicators across countries across time. Retrieved (Personal).Google Scholar
- Sargent, T. J., & Sims, C. (1977). Business cycle modeling without pretending to have too much a priori economic theory. Minneapolis: Federal Reserve Bank of Minneapolis.Google Scholar
- Sen, A. (2001). Development as Freedom. Oxford: Oxford Paperbacks.Google Scholar
- Stanton, E. (2007). The human development index: A history. PERI Working Papers. Retrieved. http://scholarworks.umass.edu/peri_workingpapers/85. Accessed 17 May 2018.
- Stein, R. (2016). Life expectancy in us drops for first time in decades, report finds. NPR.org. Retrieved December 9, 2016. http://www.npr.org/sections/health-shots/2016/12/08/504667607/life-expectancy-in-u-s-drops-for-first-time-in-decades-report-finds.
- United Nations Development Programme. (2010). Human development report 2010: The real wealth of nations: pathways to human development. Basingstoke: Palgrave Macmillan.Google Scholar
- United Nations Development Programme. (2013a). Expected years of schooling (of children) (years): Human development reports. Retrieved January 16, 2017. http://hdr.undp.org/en/content/expected-years-schooling-children-years.
- United Nations Development Programme. (2013b). GNI per Capita in PPP Terms (Constant 2011 PPP$): Human development reports. Retrieved January 16, 2017. http://hdr.undp.org/en/content/gni-capita-ppp-terms-constant-2011-ppp.
- United Nations Development Programme. (2013c). Life expectancy at birth (years): Human development reports. Retrieved January 16, 2017. http://hdr.undp.org/en/69206.
- United Nations Development Programme. (2013d). Mean years of schooling (of adults) (years) : Human development reports. Retrieved January 16, 2017. http://hdr.undp.org/en/content/mean-years-schooling-adults-years.
- United Nations Development Programme. (2014). Human development report 2014: Sustaining human progress: reducing vulnerabilities and building resilience.Google Scholar
- United Nations Statistical Division. (2016). United Nations Statistics Division—Standard Country and Area Codes Classifications (M49). Retrieved January 16, 2017. http://unstats.un.org/unsd/methods/m49/m49regin.htm.
- World Bank. (2016). How are the income group thresholds determined?—World Bank Data Help Desk. Retrieved January 16, 2017. https://datahelpdesk.worldbank.org/knowledgebase/articles/378833-how-are-the-income-group-thresholds-determined.