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Using Spatial Factor Analysis to Measure Human Development

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  • Qihua Qiu
  • Jaesang Sung
  • Will Davis
  • Rusty Tchernis

Abstract

We propose a Bayesian factor analysis model as an alternative to the Human Development Index (HDI). Our model provides methodology which can either augment or build additional indices. In addition to addressing potential issues of the HDI, we estimate human development with three auxiliary variables capturing environmental health and sustainability, income inequality, and satellite observed nightlight. We also use our method to build a Millennium Development Goals (MDG) index as an example of constructing a more complex index. We find the “living standard” dimension provides a greater contribution to human development than the official HDI suggests, while the “longevity” dimension provides a lower proportional contribution. Our results also show considerable levels of disagreement relative to the ranks of official HDI. We report the sensitivity of our method to different specifications of spatial correlation, cardinal-to-ordinal data transforms, and data imputation procedures, along with the results of a simulated data exercise.

Suggested Citation

  • Qihua Qiu & Jaesang Sung & Will Davis & Rusty Tchernis, 2017. "Using Spatial Factor Analysis to Measure Human Development," NBER Working Papers 23952, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:23952
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    1. Will Davis & Alexander Gordan & Rusty Tchernis, 2021. "Measuring the spatial distribution of health rankings in the United States," Health Economics, John Wiley & Sons, Ltd., vol. 30(11), pages 2921-2936, November.
    2. Jaesang Sung & Qihua Qiu & Will Davis & Rusty Tchernis, 2022. "Design and Application of an Area-Level Suicide Risk Index with Spatial Correlation," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 161(1), pages 77-104, May.
    3. Mehdi Jabbari & Majid Shafiepour Motlagh & Khosro Ashrafi & Ghahreman Abdoli, 2020. "Differentiating countries based on the sustainable development proximities using the SDG indicators," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 22(7), pages 6405-6423, October.
    4. Wang, Hanjie & Feil, Jan-Henning & Yu, Xiaohua, 2023. "Let the data speak about the cut-off values for multidimensional index: Classification of human development index with machine learning," Socio-Economic Planning Sciences, Elsevier, vol. 87(PA).
    5. Xiang Luo & Jingjing Qin & Qing Wan & Gui Jin, 2023. "Spatial Human Development Index in China: Measurement and Interpretation Based on Bayesian Estimation," IJERPH, MDPI, vol. 20(1), pages 1-18, January.
    6. Yusheng Kong & Peter Yao Lartey & Fatoumata Binta Maci Bah & Nirmalya B. Biswas, 2018. "The Value of Public Sector Risk Management: An Empirical Assessment of Ghana," Administrative Sciences, MDPI, vol. 8(3), pages 1-18, July.

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    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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