Skip to main content
SpringerLink
Log in

Does Human Development Index Provide Rational Development Rankings? Evidence from Efficiency Rankings in Super Efficiency Model

  • Published:
Social Indicators Research Aims and scope Submit manuscript

Abstract

The human development index (HDI) rankings have provided a referenced measure for people to choose a country in which to travel or live. This paper employs a superefficiency model to evaluate the rationality of the HDI rankings of 19 evaluated OECD countries in 2009. Compared to the HDI rankings, the efficiency rankings measured by the super-efficiency model have the following two advantages: (1) they consider the inputs that are used to generate the indicators for constructing the HDI, and decide the weights of inputs and outputs endogenously; (2) the input slacks measured by the super-efficiency model can evaluate whether the inputs are over-used and provide the improvement path of each country’s input variables. Empirical result shows that approximately 75 % of the evaluated countries had rather different results in the efficiency rankings and the HDI rankings. Additionally, the input slack shows that roughly 70 % of sample countries over-used their capital per labor relative to their existing outputs (or the HDI).

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

Notes

  1. The considerations of health and education in the HDI satisfy the propositions of Becker (1964) and Blaug (1976) that the utilization of human capital and education play important actors in a country’s development.

  2. Even though there are weight constraints in DEA models, the optimal weights of inputs and outputs are also determined endogenously.

  3. The use of the HDI is to rank countries or regions by level of human development: low, medium, and high.

  4. This paper abandons the other indicator used for constructing the HDI-literacy rate, because the rates have no prominent difference among the 19 sample countries.

  5. For more details on the criticisms on HDI, see Kovacevic (2011).

  6. Tavares (2002) and Emrouznejad et al. (2008) provide a comprehensive bibliography of methodological and application aspects of DEA.

  7. While Ülengin et al. (2011) employ super-efficiency model and artificial neural networks to improve the original HDI, the inputs (e.g., efficiency enhancers, and innovation and sophistication factors) used in their super-efficiency model are more likely to be classified as outputs, not inputs.

  8. Even for the new method developed for calculating HDI after 2010, the HDI is constructed by geometric mean of the three normalized indices.

  9. For more details on the utility of super-efficiency model, see Andersen and Petersen (1993).

  10. While the UNDP has used a new method to measure the HDI since 2011, the latest data sets are available in 2009.

  11. We have tried to search the missing data from other dataset or the statistical data of individual countries; however, the result is disappointed. In addition, some previous studies employing OECD countries as sample objects to conduct relative empirical analysis have also faced the problem of missing data (e.g., Dreger and Reimers 2005; Baltagi and Moscone 2010). We appreciate the suggestion of one anonymous reviewer.

  12. As mentioned early above, our main aim is not to cover complete inputs and outputs in the super-efficiency model. Thus, we choose only two crucial inputs in the super-efficiency model.

References

  • Alkire, S. (2002). Dimensions of human development. World Development, 30(2), 181–205.

    Article  Google Scholar 

  • Allen, R., Athanassopoulos, A., Dyson, R., & Thanassoulis, E. (1997). Weight restrictions and value judgments in data envelopment analysis: evolution, development and future directions. Annals of Operations Research, 73, 13–34.

    Article  Google Scholar 

  • Al-Shammari, M. (1999). A multi-criteria data envelopment analysis model for measuring the productive efficiency of hospitals. International Journal of Operations & Production Management, 19(9), 879–897.

    Google Scholar 

  • Anand, S., & Sen, A. (1994). Human development index: Methodology and measurement. New York: UNDP.

    Google Scholar 

  • Andersen, P., & Petersen, N. C. (1993). A procedure for ranking efficient units in data envelopment analysis. Management Science, 39, 1261–1264.

    Article  Google Scholar 

  • Baltagi, B. H., & Moscone, F. (2010). Health care expenditure and income in the OECD reconsidered: Evidence from panel data. Economic Modelling, 27(4), 804–811.

    Article  Google Scholar 

  • Banker, R. D., Conrad, R. F., & Strauss, R. P. (1986). A comparative application of data envelopment analysis and translog methods: An illustrative study of hospital production. Management Science, 32, 30–44.

    Article  Google Scholar 

  • Becker, G. S. (1964). Human capital. New York: Columbia University Press.

    Google Scholar 

  • Blaug, M. (1976). An introduction to the economics of education. Harmondsworth: Penguin.

    Google Scholar 

  • Charnes, A., Cooper, W., & Rhodes, E. (1978). Measuring the efficiency of decision making units. Europe Journal of Operational Research, 2, 429–444.

    Article  Google Scholar 

  • Cherchye, L., Ooghe, E., & Van Puyenbroeck, T. (2008). Robust human development rankings. Journal of Economic Inequality, 6(4), 287–321.

    Article  Google Scholar 

  • Coelli, T. J., Rao, D. S., O’Donnell, C. J., & Battese, G. E. (2005). An introduction to efficiency and productivity analysis. Berlin: Springer.

    Google Scholar 

  • Desai, M. (1991). Human development: Concepts and measures. European Economic Review, 35, 350–357.

    Article  Google Scholar 

  • Despotis, D. K. (2005a). Measuring human development via data envelopment analysis: The case of Asia and the Pacific. Omega, 33(5), 385–390.

    Article  Google Scholar 

  • Despotis, D. K. (2005b). A reassessment of the human development index via data envelopment analysis. Journal of the Operational Research Society, 56, 969–980.

    Article  Google Scholar 

  • Dreger, C., & Reimers, H. E. (2005). Health care expenditures in OECD countries: A panel unit root and cointegration analysis. International Journal of Applied Econometrics and Quantitative Studies, 2(2), 5–20.

    Google Scholar 

  • Emrouznejad, A., Barnett, R. P., & Tavares, G. T. (2008). Evaluation of research in efficiency and productivity: A survey analysis of the first 30 years of scholarly literature in DEA. Socio-Economic Planning Sciences, 42(3), 151–157.

    Article  Google Scholar 

  • Gormely, P. J. (1995). The human development index in 1994: Impact of income on country rank. Journal of Economic and Social Measurement, 21, 253–267.

    Google Scholar 

  • Grimm, M., Harttgen, K., Misselhorn, M., & Klasen, S. (2008). A human development index by income groups. World Development, 36(12), 2527–2546.

    Article  Google Scholar 

  • Jorgenson, D. (2009). The economics of productivity. An Elgar reference collection. Cheltenham: UK.

    Google Scholar 

  • Kovacevic, M. (2011). Review of HDI critiques and potential improvements (p. 33). UNDP: Human Development Research Paper.

    Google Scholar 

  • Lozano, S., & Gutiérrez, E. (2008). Data envelopment analysis of the human development index. International Journal of Society Systems Science, 1(2), 132–150.

    Article  Google Scholar 

  • Mahlberg, B., & Obersteiner, M. (2001). Remeasuring the HDI by data envelopment analysis. Interim report, IR-01-069. Laxenburg, Austria: International Institute for Applied Systems Analysis (IIASA).

    Google Scholar 

  • Malul, M., Hadad, Y., & Ben-Yair, A. (2009). Measuring and ranking of economic, environmental and social efficiency of countries. International Journal of Social Economics, 36, 832–843.

    Article  Google Scholar 

  • McGillivray, M. (1991). The human development index: Yet another redundant composite development indicator? World Development, 19(10), 1461–1468.

    Article  Google Scholar 

  • Mostafa, M. M. (2007). Evaluating the comparative market efficiency of top listed companies in Egypt. Journal of Economic Studies, 34(5), 430–452.

    Article  Google Scholar 

  • Musai, M., & Ghorbani, P. (2008). Effect of factors affecting demand for inbound tourist travel to Iran after the Islamic Revolution until 2004. Proceedings of the National Conference on Investment in Tourism Development. Tehran: Tarbiat Modarres University.

    Google Scholar 

  • Musai, M., Mehrara, M., Nemati, S. F., & Tak, M. N. (2011). Demand for travel to Iran and human development index. European Journal of Social Sciences, 25(1), 14–20.

    Google Scholar 

  • NÜbler, I. (1995). The human development index revisited. Intereconomics Review of European Economic Policy, 30(4), 171–176.

    Article  Google Scholar 

  • Ogwang, T. (2000). Inter-country inequality in human development indicators. Applied Economics Letters, 7(7), 443–446.

    Article  Google Scholar 

  • Osberg, L., & Sharpe, A. (2003). Human well-being and economic well-being: What values are implicit in current indices? Centre for the study of living standards research report, 04. Ottowa: Centre for the Study of Living Standards.

    Google Scholar 

  • Pan, S. C., Liu, S. Y., Peng, C. J., & Wu, P. C. (2011). Local governments’ efficiency evaluation: Consideration of undesirable outputs and super-efficiency. African Journal of Business Management, 5(12), 4746–4754.

    Google Scholar 

  • Panigrahi, R., & Sivramkrishna, S. (2002). An adjusted human development index: Robust country rankings with respect to the choice of fixed maximum and minimum indicator values. Journal of Human Development, 3(2), 301–311.

    Article  Google Scholar 

  • Raab, R., & Habib, E. (2007). A productivity growth accounting approach to the ranking of developing and developed nations. The International Journal of Accounting, 42, 396–415.

    Article  Google Scholar 

  • Sagar, A. D., & Najam, A. (1998). The human development index: A critical review. Ecological Economics, 25, 249–264.

    Article  Google Scholar 

  • Scheel, H. (2000). EMS: Efficiency measurement system user’s manual. Version 1.3.

  • Sen, A. (2000). A decade of human development. Journal of Human Development, 1(1), 17–23.

    Article  Google Scholar 

  • Steinmann, L., & Zweifel, P. (2003). On the (in)efficiency of Swiss hospitals. Applied Economics, 35(3), 361–370.

    Article  Google Scholar 

  • Taner, M. T., Sezen, B., Alpkan, L., & Aren, S. (2010). Recomputation of UNDP’s HDI rankings by data envelopment analysis. St. Petersburg, Russia: International Strategic Management Conference.

    Google Scholar 

  • Tavares, G. (2002). A bibliography of data envelopment analysis (1978–2001). Rutcor Research Report, RRR 01–02, January.

  • Ülengin, F., Kabak, Ö., Önsel, S., Aktas, E., & Parker, B. R. (2011). The competitiveness of nations and implications for human development. Socio-Economic Planning Sciences, 45(1), 16–27.

    Article  Google Scholar 

  • UNDP (United Nations Development Program). (2008). Human development reports, http://hdr.undp.org/en/humandev/.

  • Wolff, H., Chong, H., & Auffhammer, M. (2009). Human development index: Are developing countries misclassified?. Milwaukee, Wisconsin: Agricultural and Applied Economics Association Annual Meeting.

    Google Scholar 

  • Zelenyuk, V., & Zheka, V. (2006). Corporate governance and firm’s efficiency: The case of a transitional country Ukraine. Journal of Productivity Analysis, 25(1–2), 143–157.

    Article  Google Scholar 

  • Zhu, J. (1996). DEA/AR analysis of the 1988–1989 performance of the Nanjing Textile Corporation. Annals of Operation Research, 66, 311–335.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of International Business, Chung Yuan Christian University, No. 200, Chung Pei Rd., Chung Li, 320, Taiwan, ROC

    Po-Chin Wu

  2. Department of Tourism and Leisure Management, Taoyuan Innovation Institute of Technology, No. 414, Sec. 3, Jhongshan E. Rd., Jhongli City, Taiwan, ROC

    Chiung-Wen Fan

  3. Department of Leisure and Recreation Management, China University of Technology, 530, Sec. 3, Jhongshan Rd., Hukou Township, Hsinchu, Hsinchu County, Taiwan, ROC

    Sheng-Chieh Pan

Authors
  1. Po-Chin Wu
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Chiung-Wen Fan
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Sheng-Chieh Pan
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Po-Chin Wu.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Wu, PC., Fan, CW. & Pan, SC. Does Human Development Index Provide Rational Development Rankings? Evidence from Efficiency Rankings in Super Efficiency Model. Soc Indic Res 116, 647–658 (2014). https://doi.org/10.1007/s11205-013-0285-z

Download citation

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11205-013-0285-z

Keywords

Search

Navigation