On Some Problems of Using the Human Development Index in Economic History
57 Pages Posted: 16 Nov 2021 Last revised: 18 Nov 2021
Date Written: November 9, 2021
We argue against the use of composite indices, such as the Human Development Index (HDI), in economic history. We show that the HDI can be interpreted as a formal representation of the analyst’s ethical system. We support our claim by introducing a new class of paternalistic social welfare functions (Graaff 1957, Mas-Colell, 1995) which encompasses all the HDI formulas put forth by the literature. The theoretical framework is illustrated by an empirical investigation of the long-run evolution of Italians’ living standards and civic liberties. We conclude that any history based on composite indices is one where both data and history play a minor role, if any.
Keywords: human development index; economic wellbeing; composite indices; living standards; CES; social welfare functions; Italy
JEL Classification: N01, N3, O15
Suggested Citation: Suggested Citation