Efficiency in human development: A Data Envelopment Analysis

The human development index (HDI) is a measure of development published annually by the UNDP. This index allows countries’ development to be assessed on the basis of three indicators that measure the health, education, and standard of living of the population. The UNDP also computes a human development that excludes this last indicator, the HDI*. The global average of the HDI is approximately 0.75, but like the HDI*, it presents some striking inter-country disparities. In this study, we wish to demonstrate that efficiency in the utilization of public resources can have an incidence on HDI* scores. Thus, owing to a certain “waste” in their use of resources, countries with similar levels of government spending may end up with differing levels of human development. We measure this efficiency using the Data Envelopment Analysis (DEA) method. Relative efficiency in resource use is thus computed by comparing the countries in the study amongst themselves.