Copula-based measurement of dependence between dimensions of well-being

Type Working Paper
Title Copula-based measurement of dependence between dimensions of well-being
Author(s)
Publication (Day/Month/Year) 2009
URL https://lirias.kuleuven.be/bitstream/123456789/253173/1/dps0924.pdf
Abstract
Well-being consists of many dimensions such as income, health and education. A society exhibits greater dependence between its dimensions of well-being when the positions of the individuals in the different dimensions are more aligned or correlated. Differences in dependence may lead to very different societies, even when the dimension-wise distributions are identical. I propose to use a copula-based framework to order societies with respect to their dependence. A class of measures of dependence is derived to which the multidimensional rank correlation coefficient belongs. I illustrate the usefulness of the approach by showing that Russian dependence between three dimensions of well-being has increased significantly between 1995 and 2003. Unfortunately, the aspect of dependence is missed by all composite well-being measures based on dimension-specific summary statistics such as the popular Human Development Index (HDI).

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