Economics Research Institute Study Paper
Utah State University Department of Economics
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A multivariate technique called principal component analysis is used to combine measures of human development. The first principal component index is the linear combination of component indexes with maximal information content. This multivariate technique accounts for differences in the variances of component indexes as well as interdependence among the component indexes. The first principal component of the three indexes used in the HDI (life expectancy, education, GDP) yields rankings nearly identical to the HDI itself. We interpret this as theoretical support for the HDI ranking system as a Inetric of international hUlnan development.
Biswas, Basudeb and Caliendo, Frank, "A Multivariate Analysis of the Human Development Index" (2002). Economic Research Institute Study Papers. Paper 244.