A VEA Benefit-of-the-Doubt Model for the HDI

Abstract

The Benefit-of-the-Doubt (BoD) model for constructing composite indicators does not account for prior judgments concerning the relative importance of individual indicators. In this paper we combine the BoD model with Value Efficiency Analysis to propose a new formulation that incorporates external preferences and value judgments by means of a “model” decision-making unit which serves as the benchmark for all other units. We explore the potential of the proposed model by using it to re-estimate the United Nations Human Development Index.