Definition of 'Human Development Index'

Definition: The Human Development Index (HDI) is a statistical tool used to

measure a country's overall achievement in its social and economic dimensions. The
social and economic dimensions of a country are based on the health of people, their
level of education attainment and their standard of living.

Description: Pakistani economist Mahbub ul Haq created HDI in 1990 which was

further used to measure the country's development by the United Nations
Development Program (UNDP). Calculation of the index combines four major
indicators: life expectancy for health, expected years of schooling, mean of years of
schooling for education and Gross National Income per capita for standard of living.

Every year UNDP ranks countries based on the HDI report released in their annual
report. HDI is one of the best tools to keep track of the level of development of a
country, as it combines all major social and economic indicators that are responsible
for economic development.

What is the Human Development Index - HDI

The Human Development Index (HDI) is a tool developed by the United
Nations to measure and rank countries' levels of social and economic
development. Four principal areas of examination are used to rank countries:
mean years of schooling, expected years of schooling, life expectancy at birth
and gross national income per capita. This index makes it possible to follow
changes in development levels over time and to compare the development
levels of different countries.

BREAKING DOWN Human Development Index - HDI

The Human Development Index (HDI) was established to place emphasis on
individuals more precisely on their opportunities to realize satisfying work and
lives. Evaluating a country's potential for individual human development
provides a supplementary metric for evaluating a country's level of
development besides considering standard economic growth statistics, such
as gross domestic product(GDP). This index can also be used to examine the
various policy choices of nations; if, for example, two countries have
approximately the same gross national income (GNI) per capita, then it can
help to evaluate why they produce widely disparate human development
outcomes. One goal of the proponents of the HDI is to stimulate public policy
debate.
How is the HDI Measured?
The HDI is essentially a summary measurement of basic achievement levels
in fundamental dimensions of human development. The computed HDI of a
country is a geometric mean of normalized indexes of each of the life aspects
that are examined – knowledge and understanding, a long and healthy life,
and an acceptable standard of living.

The health aspect of the HDI is measured by the life expectancy, as

calculated at the time of birth, in each country. Education is measured on two
levels: the mean years of schooling for residents of a country and the
expected years of schooling that a child has at the average age for starting
school. The metric chosen to represent standard of living is GNI per capita
based on purchasing power parity (PPP), a common metric used to reflect
average income.

Limitations of the Index

The HDI is a simplification and an admittedly limited evaluation of human
development. The HDI does not specifically reflect quality of life factors, such
as empowerment movements or overall feelings of security. In recognition of
these facts, the Human Development Report Office (HDRO) provides
additional composite indices to evaluate other life aspects, including inequality
issues such as gender disparity or racial inequality. Examination and
evaluation of a country's HDI is best done in concert with examining these and
other factors, such as the country's rate of economic growth, expansion of
employment opportunities and the success of initiatives undertaken to improve
the overall quality of life within a country.

Human Development Index (HDI) Definition

The Human Development Index HDI is defined as the composite statistics used to rank countries
by levels of human development. The HDI is a measure of health, education and income. It
measures the average achievements in a country in these three basic dimensions of human
development, calculated into an index.

HDI Dimensions and Indicators

The 2010 Human Development Report revised the HDI formula using data and methodologies
that were not available in most countries when the first HDI was published in the 1990 Human
Development Report. The HDI was calculated in 2010 using the following indicators:

 Health - Life expectancy at birth

 Education - expected years schooling for school-age children and average years of
schooling in the adult population
 Income - measured by Gross National Income (GNI) per capita (PPP US$)
The disaggregated HDI
One way the use of the human development index has been improved is through disaggregation.
A country's overall index can conceal the fact that different groups within the country have very
different levels of human development. Disaggregated HDIs are arrived at by using the data for
the HDI components pertaining to each of the separate groups; treating each group as if it was a
separate country. Such groups may be defined relative to income, geographical or administrative
regions, urban/rural residence, gender and ethnicity.

Adjusting the HDI for inequalities

In 2010, the Inequality-adjusted HDI (IHDI) was introduced. The IHDI is the HDI adjusted for
inequalities in the distribution of achievements in each of the three dimensions of the HDI (health,
education and income). The IHDI will be equal to the HDI value when there is no inequality, but
falls below the HDI value as inequality rises. The difference between the HDI and the IHDI
represents the ‘loss’ in potential human development due to inequality and can be expressed as
a percentage. In 2012 the IHDI was calculated for 132 countries and the results are telling. For
example, United States suffers a loss of more than 12% when its HDI value is adjusted for
inequalities and moves 13 places down in rank.

The non-income Human Development Index

The non-income HDI is Human Development Index calculated without the income component
(just with health and education). The non-income HDI seeks to show countries in the world that
do best in terms of non-income development. When the non-income HDI is compared HDI with
the ranking derived from the income indicator, the contrast is very interesting: only 2 countries
(the US and Norway) are on both top 10 lists. There is also a vast difference in several countries
from the Persian Gulf (Qatar, Kuwait, and the UAE) make it into the top 10 income list but not
into the non-income HDI list.[1]

Background
The Human Development Index (HDI) was first published in 1990, under the guidance of Mahbub
ul Haq, a former finance minister of Pakistan, with technical assistance from the Nobel laureate
economist Amartya Sen. The HDI appears in the Statistical Annex of the United Nations
Development Programme's (UNDP) annual flagship publication, the Human Development
Report.
The HDI was proposed as an alternative to conventional assessments of development based on
measures of per capita income, such as Gross Domestic Product. Essentially, the measure aims
to go beyond income to provide a broader look at a country’s well-being. Its components –
health, education, and income - are intended to capture the essential dimensions of the quality of
human life or human development.

How is HDI calculated?
Older versions of the HDI were calculated using the following indicators:

 Health - Life expectancy at birth

 Education - measured by adult literacy and the combined primary, secondary and tertiary
enrolment ratio
 Income - measured by GDP per capita (PPP US$)
The indicators of the three dimensions are calibrated and combined to generate an HDI score
between zero and one. Countries are grouped into four human development categories or
quartiles: very high, high, medium and low. A country is in the very high group if its HDI is in the
top quartile, in the high group if its HDI is in percentiles 51–75, in the medium group if its HDI is
in percentiles 26–50, and in the low group if its HDI is in the bottom quartile.

For more information on calculating the HDI refer to the 2010 Human Development
Report’s Technical notes.

Criticisms
The HDI has come under criticism for some of the following reasons:

 Too similar to GDP per capita in the outcome of the country rankings

 The components (health, education and income) are weighted equally but do not
necessarily equally contribute to human development
 The components are too narrow and do not contain indicators of freedom or political
development, which many consider crucial to human development
 The indicators do not take into account inequalities within countries

 Sustainability is not considered

References
1. ↑ http://hdr.undp.org/en/humandev/lets-talk-hd/2011-01/