Revisiting controversies on the measurement of Human development

A decade after Klugman et al's (2011) magisterial criticism on the HDI, controversies on the issue of measurement of human development remains alive. This paper updates this debate by focusing on 3 key issues: i) does the measurement of the HDI through a single value have empirical proof? ii) Is the equal weighting of components of the index statistically justified? iii) What weighting system should be adopted when taking into account the heterogeneity of the countries? The paper addresses these issues using Principal Components Analysis (PCA) on the 2020 HDI data. PCA results support the measurement of human progress through a composite index. The paper shows that the choice of equal weights (1/3, 1/3, 1/3) is valid in the new HDI calculations. However, when taking into account the heterogeneity of the ranked countries, weights should be unequal. The health dimension, the knowledge one and the decent standard of living should be respectively weighted as follow: (0.357, 0.354, 0.289) for the first set of homogeneous countries called “high human development countries’’; (0.468, 0.499, 0.03) for the second ones called “medium human development countries” and (0.271, 0.370, 0.359) for the third ones called “low human development countries”. As a consequence, these unequal weights schemes modify the country specific score and then, the UNDP 2020 ranking. JEL Codes: C1, C180, I32, O57