Human Development Index: Are Developing Countries Misclassified? (former title: "Consequences of Data Error in Aggregate Indicators: Evidence from the Human Development Index)

Hendrik Wolff (), Howard Chong () and Maximilian Auffhammer

No 49763, 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin from Agricultural and Applied Economics Association

Abstract: This paper examines the consequences of data error in data series used to construct aggregate indicators. Using the most popular indicator of country level economic development, the Human Development Index (HDI), we identify three separate sources of data error. We propose a simple statistical framework to investigate how data error may bias rank assignments and identify two striking consequences for the HDI. First, using the cutoff values used by the United Nations to assign a country as ‘low’, ‘medium’, or ‘high’ developed, we find that currently up to 45% of developing countries are misclassified. Moreover, by replicating prior development/macroeconomic studies, we find that key estimated parameters such as Gini coefficients and speed of convergence measures vary by up to 100% due to data error.

Keywords: International; Development (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-dev and nep-hap
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea09:49763

DOI: 10.22004/ag.econ.49763

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