Human Flourishing and Technical Efficiency: Evidence from Panel Data

According to James Heckman, human development is economic development. This means that nurturing flourish and capable human beings through the channel of fostering valuable skills under the influence of various factors (environment, school, and parental investment) lead to reducing inequality, increasing economic productivity, and production capacity. The stock of these skills in adulthood leads to the various outcomes that Heckman and Corbin (2016) call human flourishing. Therefore, an index called the Human Flourishing Index (HFI) is proposed and calculated for the first time in this study. Accordingly, the present study establishes a link between Heckman's theory and efficiency analysis by inserting HFI as a proxy of human capital in the production function, and by using the Stochastic Frontier Analysis (SFA) model of Battese and Coelli (1993; 1995); examines the technical efficiency of the production of the selected countries group and identifies the factors affecting it in the period of 2003-2017. Estimation of a frontier production function and the inefficiency effects model indicate a positive and significant effect of HFI on the per capita production of the selected countries group and four factors of official entrance age to pre-primary education, pupil-teacher ratio (pre-primary), percentage of enrolment in primary education in private institutions and gross enrolment ratio (secondary) on the technical efficiency of production. The results also indicate the increasing trend of HFI and technical efficiency of the selected countries group during the period.