Human Development Index

The Human Development Index (HDI) is an index used to rank countries by level of "human development", which usually also implies whether a country is a developed, developing, or underdeveloped country.

Summary

The Human Development Index combines normalized measures of life expectancy, literacy, educational attainment, and GDP per capita for countries worldwide. It is claimed as a standard means of measuring human development—a concept that, according to the United Nations Development Program (UNDP), refers to the process of widening the options of persons, giving them greater opportunities for education, health care, income, employment, etc. The basic use of Human Development Index is to measure a country's development.

The index was developed in 1990 by Pakistani economist Mahbub ul Haq, Sir Richard Jolly, with help from Gustav Ranis of Yale University and Lord Meghnad Desai of the London School of Economics. It has been used since then by UNDP in its annual Human Development Report. It is claimed that ideas of Indian Nobel prize winner Amartya Sen were influential in the development of the HDI. The HDI now serves as a path towards a wide variety of more detailed measures contained in the Human Development Reports.

Criticisms

The Human Development Index has been criticized on a number of grounds, including failure to include any ecological considerations, focusing exclusively on national performance and ranking, and not paying much attention to development from a global perspective. Two authors claimed that the human development reports "have lost touch with their original vision and the index fails to capture the essence of the world it seeks to portray". The index has also been criticized as "redundant" and a "reinvention of the wheel", measuring aspects of development that have already been exhaustively studied. The index has further been criticized for having an inappropriate treatment of income, lacking year-to-year comparability, and assessing development differently in different groups of countries.

Some authors have proposed alternative indices to address some of the index's shortcomings.

Economist Bryan Caplan has criticized the way scores in each of the three components are bounded between zero and one, so rich countries effectively cannot improve their ranking in certain categories, even though there is a lot of scope for economic growth and longevity left, "This effectively means that a country of immortals with infinite per-capita GDP would get a score of .666 (lower than South Africa and Tajikistan) if its population were illiterate and never went to school." Scandinavian countries consistently come out top on the list, he argues, "because the HDI is basically a measure of how Scandinavian your country is."

The HDI has been criticized as a redundant measure that adds little to the value of the individual measures composing it; as a means to provide legitimacy to arbitrary weightings of a few aspects of social development; as a number producing a relative ranking which is useless for inter-temporal comparisons, and difficult to compare a country's progress or regression because the HDI for a country in a given year depends on the levels of, say, life expectancy or GDP per capita of other countries in that year. However, each year, UN member states are listed and ranked according to the computed HDI. If high, the rank in the list can be easily used as a means of national aggrandizement; alternatively, if low, it can be used to highlight national insufficiencies. Using the HDI as an absolute index of social welfare, some authors have used panel HDI data to measure the impact of economic policies on quality of life.

Summary measure of human development

The Human Development Index (HDI) is a summary measure of human development that is published by the United Nations Development Programme (UNDP). The HDI provides an alternative to the common practice of evaluating a country’s progress in development based on per capita Gross Domestic Product (GDP). The HDI is the signature trademark of the Human Development Report (HDR), an independent report commissioned by the UNDP that is written by a team of scholars, development practitioners and members of the Human Development Report Office of UNDP. The HDI has had a significant impact on drawing the attention of governments, corporations and international organizations to aspects of development that focus on the expansion of choices and freedoms, not just income.

The HDI measures the average achievements in a country in three basic dimensions of human development:

• A long and healthy life, as measured by life expectancy at birth.
• Knowledge, as measured by the adult literacy rate (with two-thirds weight) and the combined primary, secondary and tertiary gross enrollment ratio (with one-third weight).
• A decent standard of living, as measured by GDP per capita in purchasing power parity (PPP) terms in US dollars.

Before the HDI itself is calculated, an index is created for each of these dimensions. To calculate these indices—the life expectancy, education and GDP indices—minimum and maximum values (goalposts) are chosen for each underlying indicator. For example, in 2004 the maximum and minimum values for life expectancy were 85 and 25 years, respectively. Performance in each dimension is expressed as a value between 0 and 1. The HDI is then calculated as a simple average of the dimension indices:
HDI = 1/3 (life expectancy index) + 1/3 (education index)+ 1/3 (GDP index).

Human Development Report

The first Human Development Report (HDR) was published in 1990, under the leadership of Pakistani economist and finance minister Mahbub ul Haq and Indian Nobel Laureate for Economics Amartya Sen.

The principal motivation behind the HDR was, according to Sen, an overarching preoccupation with the growth of real income per capita as a measure of the well-being of a nation. Physical expansion of an economy, as measured by per capita GDP, does not necessarily mean that people are better off in the larger sense of the term: health, freedom, education, meaningful work and leisure time, for example. As stated in the inaugural 1990 HDR:

People are the real wealth of a nation. The basic objective of development is to create an enabling environment for people to enjoy long, healthy and creative lives. This may appear to be a simple truth. But it is often forgotten in the immediate concern with the accumulation of commodities and financial wealth.

Since the first Report in 1990, four new composite indices for human development have been developed — the Human Development Index, the Gender-related Development Index, the Gender Empowerment Measure, and the Human Poverty Index.

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