Maximizing Human Development

Merwan Engineer () and Ian King

No 1111, Department of Economics - Working Papers Series from The University of Melbourne

Abstract: The Human Development Index (HDI) is widely used as an aggregate measure of overall human well being. We examine the allocations implied by the maximization of this index, using a standard growth model — an extended version of Mankiw, Romer, andWeil’s (1992) model — and compare these with the allocations implied by the golden rule in that model. We find that maximization of the HDI leads to the overaccumulation of both physical and human capital, relative to the golden rule, and consumption is pushed to minimal levels. We then propose an alternative specification of the HDI, which replaces its income component with a consumption component. Maximization of this modified HDI yields a “human development golden rule” which balances consumption, education and health expenditures, and avoids the more extreme implications of the existing HDI.

Keywords: Economic growth; Human Development Index; Planning (search for similar items in EconPapers)
Pages: 29 pages
Date: 2010
New Economics Papers: this item is included in nep-dev, nep-dge, nep-hap, nep-hrm and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Maximizing human development (2013)
Journal Article: Maximizing human development (2013)
Working Paper: Maximizing Human Development (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:mlb:wpaper:1111

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