Eat AND Study but Wii OR Ski! Differentiating Between ‘Basic’ and ‘Non-basic’ Dimensions in a Multidimensional Index

Abstract

AbstractMeasuring and monitoring multidimensional wellbeing have become central issues in international policy debates in recent years. Interpreting heterogeneity in achievement levels across dimensions in terms of individual freedom of choice, and arguing that the degree of substitutability should not only depend on this variation, but also on the typology of dimensions, we propose a Generalized Multidimensional Synthetic index that introduces several layers of flexibility in the aggregation methodology. We classify dimensions into different groups, for example basic and non-basic, and allow for varying substitutability rates within as well as between groups. After examining the theoretical properties of the new index, we perform simulation experiments which highlight the salient features of our index compared to other frequently used indices.