An Automatic-Democratic Approach to Weight Setting for the New Human Development Index

32 Pages Posted: 3 Aug 2012

See all articles by Chris Tofallis

Chris Tofallis

University of Hertfordshire Business School

Date Written: July 3, 2012

Abstract

Perhaps the most difficult aspect of constructing a multi-dimensional index is that of choosing weights for the components. This problem is often bypassed by adopting the ‘agnostic’ option of equal weights, as in the Human Development Index. This is an annual ranking of countries produced by the United Nations Development Programme based on life expectancy, education, and per capita gross national income. These three dimensions are now aggregated multiplicatively. Whatever weights (exponents) are chosen for these dimensions, some nations will feel disadvantaged. To avoid the use of arbitrary weights we propose for consideration a two-step approach: (1) Find the most advantageous set of weights for each nation in turn. (2) Regress the associated optimal scores on the underlying indicators to find a single weight set. This approach has the properties of non-subjectivity, fairness, and convenience. The result is that the highest weight is placed on the life expectancy dimension.

Keywords: Human Development Index, index construction, social composite index, aggregation, ranking, data envelopment analysis

Suggested Citation

Tofallis, Chris, An Automatic-Democratic Approach to Weight Setting for the New Human Development Index (July 3, 2012). Journal of Population Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2123531

Chris Tofallis (Contact Author)

University of Hertfordshire Business School ( email )

College Lane
Hatfield, Hertfordshire AL10 9AB
United Kingdom

HOME PAGE: http://tinyurl.com/ChrisTofallis

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