A comparison between principal component analysis approach and human development index

چکیده مقاله

This paper uses principal component analysis to combine various measures of human development in an optimal fashion to create a development index. We interpret this finding as theoretical support for the HDI ranking system as a metric of international human development. Since the simple average of the component indexes yields rankings roughly equivalent to a more complex multivariate technique that selects the weights optimally, this appears to be a case where little is lost in the simplistic method, and much is gained in terms straightforwardness. Indeed, while the strength of the HDI appears to lie in its easy comprehension, the weights used therein are consistent with multivariate techniques that generate weights optimally.

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