| Front | Back | | --- | --- | | A country's GDP per capita rises by 10% over five years, but its Gini coefficient increases from 0.35 to 0.55. Predict why using GDP per capita alone to measure development is misleading here. |

GDP per capita is an average and omits income inequality.
It masks the fact that economic gains are concentrated among the wealthy, leaving the majority's living standards unchanged.

| | A government increases primary school enrolment to 99% but does not hire more teachers or buy materials. Predict why using "enrolment rate" as a single indicator of educational development is misleading. |

Enrolment rates lack quality context.
They do not reflect class sizes, teacher training, or actual learning outcomes, overestimating true development.

| | A national household survey on income excludes families living in temporary illegal settlements. Predict the effect of this sampling error on the country's reported development data. |

It causes an overestimation of economic well-being.
Excluding the poorest populations distorts the sample, leading to inaccurate representations of poverty.

| | A country has a high GDP per capita but a low HDI ranking. Predict what policy guidance this composite indicator discrepancy offers to policymakers. |

It indicates that economic growth is not translating into human capital.
It prompts policymakers to shift investment toward social sectors like healthcare and education.

| | What are two distinct advantages of using single indicators to measure economic development? |

Simplicity and clarity: They focus on one specific measure, making them easy to interpret.
Comparability: Being objective and quantifiable, they allow straightforward comparisons over time and across countries.

| | Why does the lack of statistical infrastructure in developing countries limit the usefulness of single indicators? |

It leads to incomplete, inaccurate, or outdated data.
This makes reliable comparisons across countries or time periods highly difficult.

| | What are two advantages of using composite indicators over single indicators to assess development? |

Multidimensional perspective: They combine multiple data points to capture a broader view of development (health, education, income).
Better policy guidance: They help identify patterns and correlations between different aspects of development.

| | Explain how weighting acts as a limitation when constructing and interpreting composite development indicators. |

Assigning weights to different dimensions is subjective.
The assigned importance of each factor may not reflect the actual development priorities of different countries.

| | Why are composite indicators more vulnerable to data limitation errors than single indicators? |

They rely on multiple variables; inaccuracy or missing data in just one component offsets and distorts the value of the entire composite index.

| | In the case of India, why does the Human Development Index (HDI) paint a different picture of development compared to GDP per capita? |

GDP per capita (USD 2,500) suggests a lower-middle-income country with strong growth.
HDI (0.633) reveals that social development lags behind, particularly due to lower life expectancy and mean years of schooling.

| | How do single indicators assist policymakers in a way that complex composite indicators might not? |

They allow for focused analysis on a single issue.
This enables policymakers to design highly precise, targeted policies for that specific sector.

| | Why does the standard structure of global composite indicators fail to represent all countries accurately? |

Development challenges vary significantly by region.
A standard composite index cannot capture unique regional priorities, such as a critical need for environmental sustainability versus basic income growth.

| | Why is complexity considered a disadvantage of composite indicators compared to single indicators? |

Combining multiple diverse variables into a single score makes the final index more difficult to interpret and trace back to specific policy failures.

| | To assess multiple dimensions of development, economists combine single indicators, which focus on one specific measure, with composite indicators, which combine multiple measures into a single index. | To assess multiple dimensions of development, economists combine single indicators, which focus on one specific measure, with composite indicators, which combine multiple measures into a single index. | | Excluding populations living in extreme poverty from household surveys is an example of a sampling error, which typically leads to an overestimation of economic well-being. | Excluding populations living in extreme poverty from household surveys is an example of a sampling error, which typically leads to an overestimation of economic well-being. | | The Human Development Index (HDI) is a composite indicator that combines three key dimensions: life expectancy, education, and income. | The Human Development Index (HDI) is a composite indicator that combines three key dimensions: life expectancy, education, and income. | | A major limitation of single indicators like real GDP per capita is their limited scope, as they completely omit critical factors like income inequality and environmental sustainability. | A major limitation of single indicators like real GDP per capita is their limited scope, as they completely omit critical factors like income inequality and environmental sustainability. | | The process of deciding how much importance to give to different variables in a composite index is known as weighting, which is highly subjective and may not suit every country's specific needs. | The process of deciding how much importance to give to different variables in a composite index is known as weighting, which is highly subjective and may not suit every country's specific needs. | | In 2022/2023, India's high economic growth was reflected by its GDP per capita, but its low HDI ranking highlighted that its social development was lagging behind its economic growth. | In 2022/2023, India's high economic growth was reflected by its GDP per capita, but its low HDI ranking highlighted that its social development was lagging behind its economic growth. |

1. Introduction to Economics2 subtopics

2. Microeconomics12 subtopics

3. Macroeconomics7 subtopics

4. The Global Economy10 subtopics

IB Economics 4.8.4 Strengths and Limitations of Approaches to Measuring Economic Development Flashcards

1. Introduction to Economics2 subtopics

2. Microeconomics12 subtopics

3. Macroeconomics7 subtopics

4. The Global Economy10 subtopics

Flashcards for 4.8.4 Strengths and Limitations of Approaches to Measuring Economic Development

Flashcards for 4.8.4 Strengths and Limitations of Approaches to Measuring Economic Development - IB