COMPARING FUNCTIONAL FORMS OF AGGREGATION FOR SYNTHETIC INDICATORS OF WELL BEING: THE ECUADORIAN CASE

Abstract

After the persistent criticism of the gross national income (GDP) as a measure of well-being, numerous proposals for synthetic indicators of different dimensions have emerged. The most notable was the Human Development Index (HDI), which although sponsored by the United Nations Development Program (UNDP) since 1991, was not free from criticism and has faced adjustments since then. Another alternative, previously proposed by Pena (1977), is the generation of indicators based on P2 Distance which have taken relevance lately. Both types of indicators allow a classification of geographical areas in general as provinces or countries. These indicators have been applied alternately with some modifications proposed by different studies generating different rankings that correlate to a greater or lesser degree.
The results show that the two functional forms evaluated generate very similar classifications within the socioeconomic context of Ecuadorian provinces, justifying opting for the geometric mean since the complexity of P2 Distance does not contribute anything additional in the classification of the provincial welfare.