Write a 4 pages paper on economic growth. 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 weights that are assigned to the sub-indices. The article asserts that this move helps to maximize the distribution distance which occurs between the used indices. As such, the article uses stochastic dominance to measure the factor that has the major contribution to the development using the HDI index.
The article uses the biased literature review which reveals the weakness of the traditional methods of measuring development. GNP and GDP are cited as the main traditional methods of measuring development. The articles espouses that GDP and GNP per capita uses the income to analyses development while there are other factors that cannot be owned or produce by individuals that lead to the development. HDI was development to remedy these shortcomings, however, HDI is criticised in using poor source of data to construct its constituents.