Working Papers
Human Capital Index (HCI) – From Uncertainty to Robustness of Comparisons
No.
1462
Publisher
ERF
Date
February, 2021
Topic
C1. Econometric and Statistical Methods and Methodology
I1. Health
I2. Education and Research Institutions
In 2019, the World Bank adopted an index developed by Kraay (2018), the Human Capital Index (HCI) (WB, 2019). It combines demographic, education, and health dimensions on a complementary statistical and econometric basis. It is used by the World Bank in the area of human development for monitoring and comparison purposes, in time and space. By construction, the HCI is subject to statistical and econometric uncertainties that are not adequately captured by comparisons and are therefore, not robust. In this paper, we propose a systematic approach taking into account these simultaneous uncertainties using a projection method. We present its practical implementation to construct confidence intervals to the HCI that reflect these uncertainties. It appears that if confidence intervals overlap for two countries or for the same country over time, then comparisons would be inconclusive regardless of the ponctual estimates.
Research Fellows
Touhami Abdelkhalek
Full Professor, Africa Institute for Research in...
Senior Associates
Dorothee Boccanfuso
Full Professor, Africa Institute for Research in...