Article Analysis

Article Analysis

Project description
Critical analysis of the following article:
Pinar, M. , Stengos, T. , Topaloglou, N. Measuring human development: A stochastic dominance approach (2013) Journal of Economic Growth, 18 (1), pp. 69-108

sample answer

The article analyses various methods and techniques that have been used traditionally and are currently used to measure human development. According to the article, traditionally, each attribute that affect human welfare is analysed separately. This approach is limited, as it does not show the relationship between the attributes. The modern methods uses construction of an aggregate index that combines different attributes such as HDI index used by UNDP. HDI combines health, income and education to make a weighted average index. The index is used to measure a country’s performance based on human longevity, living standard and knowledge. However, the index is limited in that it ignores the relationship of the attributes that are used to construct it. As such, two countries can have the same HDI but have different levels of education standards or health care. In order to eliminate the limitations of the HDI and traditional models that are used to measure human development, the article proposes a new model. The model is constructed based on stochastic dominance.

The stochastic model used compares different variables according to the preferences of rational economic decision makers and ordering them in a stochastic manner. The model has not been used because it can only be tested pair-wise. The article contends that the stochastic model weights are explicit which leads to the creation of the scenario that represents the most optimistic development. The model gives more weight to the dimension that is realized much higher in the countries than other dimensions. The article uses the HDI index as a benchmark and uses the stochastic dominance model to get………………….

Pinar, M. , Stengos, T. , Topaloglou, N., (2013) . Measuring human development: A stochastic dominance approach. Journal of Economic Growth, 18 (1), pp. 69-108.