Human development index

INTRODUCTION:

 The development of an economy should be measured properly.

 If we know the progress of an economy, then planning for the economy will be
possible.
 The economic development of a nation is based on the Human Development of that
nation.
 How can we estimate the economic development of a nation?
o One person may define progress by the increase in his material wealth.
o Another person may define, that the attainment of a college degree or
maintaining healthy well-being may be more important.

Growth and development:

o Both growth and development refer to changes over some time.

 Growth:
o Quantitative and value-neutral change.
o Positive or a negative sign.
 Development :
o Qualitative change is always value positive.
o Development occurs when positive growth takes place.
o For example, if the population of a city grows from lakh to two lakhs over some time, we say
the city has grown.
o However, if facilities like housing, provision of basic services, and other characteristics
remain the same, then this growth has not been accompanied by development.
o The quality of life people enjoy in a country, the opportunities they have, and the freedoms
they enjoy, are important aspects of development.
o Access to resources, health, and education are the key areas in human development.

Human development:

 Human development is defined as the process of enlarging people’s freedom, and

opportunities and improving well-being.
 It values capabilities related to health, education, and long-life nutrition as ends in itself and
sees income as the means to achieve these.

Features of human development

 Capacity to live a long and fulfilling life.
 Avoid mortality during infancy and childhood.
 High literacy level.
 Personal liberty and freedom.
 Free from hunger and malnourishment.

Pillars of human development

 These are desirably structured that need to be in place for human development to prosper.
 Equity- The idea of fairness for every person between men and women i.e. each has a right
to health and education.
 Sustainability- The view that we all have the right to a living that can sustain our lives and
have access to more even distribution of goods.
 Productivity- The full participation of people in the process of income generation.
 Empowerment- Freedom of the people to influence development and decisions that affect
their lives.
 Cooperation- This stipulates participation and belonging to communities as a means of
mutual enrichment and a source of social meaning.
 Security- Offers people development opportunities freely and safely with confidence that
they will not disappear suddenly in the future.

Factors affecting human development

 Economic growth
 Demographic factors
 Political climate
 External factors

What is the human development index?

 It is a tool used to measure a country’s overall achievement in its social and
economic dimensions.
 Definition:
The human development index (HDI) is a composite statistic of
life expectancy, education, and per capita income indicators, which is used
to rank countries into four tiers of human development.
 The human development index is a measure of economic development and
economic welfare.
 For each dimension, the HDI sets a minimum and maximum called goal posts
and then shows where each country stands about these goalposts,
expressed as a value between 0 and 1.

 The human development index examines three important criteria of

economic development
1. Life expectancy
 2. Education
3. Income levels
 Create an overall score between 0 and 1
 1- indicates a high level of economic development
 0- a very low level.

Measuring human development

 The human development index(HDI) ranks the countries based on
their performance in the key areas of, education and access to
resources.

Health:
 The indicator chosen to assess health is the life expectancy at birth.
 A higher life expectancy means that people have a greater chance of living longer and
healthier lives.

Education:
 The adult literacy rate and the gross enrolment ratio represent access to knowledge.
 The number of adults who can read and write and the number of children enrolled in
schools show how easy or difficult it is to knowledge in a particular country.

Access to resources:
It is measured in terms of purchasing
power (IN U.S. DOLLARS)

Calculation of HDI:

1. Life expectancy Index (LEI):

It is calculated using a minimum value of 20 years and a maximum
value of 83.57 years. This is the observed maximum value of the indicators from the
countries in the time series, 1980-2012.
LEI=LE-20/(80-20)
2. Educational Index (EI):
 It is measured by combing the mean years of schooling for adults aged
25 years and expected years of schooling for children of school entering age into a single
statistic.
EI=( MYSI+EYSI)/2
 Expected years of schooling estimates (EYSI) are based on enrolment age at all levels of
education and population of official school age for all levels of education. Expected years of
schooling are capped at 18 years. The indicators are normalized using a minimum value of
zero and maximum values are set to the actual observed maximum value of mean years of
schooling from the countries in the time series 11980-2012, that is 13.3 years estimated for
the US in 2010. Expected years of schooling are maximized by its cap,18 years.

EYSI= EYS/18

 Mean years of schooling index:

Mean years of schooling (MYSI) is estimated based on
educational attainment data from censuses and surveys available in the UNESCO institute for
statistics database and Barro and lee (2010) methodology.

MYSI= MYS/15

3. Income Index (II):

This component is measured by GNI per capita instead of GDP per capita. It
uses the logarithm of income to reflect the diminishing importance of income with increasing GNI.

II= [In(GNIpc)-In(100)]/[In(75000)-In(100)

HDI= 3√(LEI*EI*II)

Example: Calculating HDI of India

Life expectancy index=0.679

Education index=0.495

Income index=0.599

HDI=(LI*EI*II)^1/3

= (0.679*0.495*0.599)^1/3

= 0.586
International Comparisons:

 Often smaller countries have done better than larger ones in human
development.
 Similarly, relatively poorer nations have been ranked higher than
richer neighbors in terms of human development.
 For example, Sri Lanka, Trinidad, and Tobago have a higher rank
than India in the human development index despite having smaller
economies.
 Similarly, within India, Kerala performs much better than Punjab and
Gujarat in human development despite having lower per capita
income.

Ranking base:
Globally countries are divided into the following four
classes according to their score on the human development
index-

Level of human Score in Number of

development development countries
index
Very high Above 0..808 49
High Between 0.700 to 53
0.807
Medium Between 0.556 to 42
0.699
Low Below 0.555 43
 HDI aspects of India

India ranks (20114)- 135

HDI- 0.586
Gain of 0.003 HDI from the previous year
Comes under medium human development countries.

INDICATORS:
Life expectancy at birth (BY UN)
Overall- 69.19 years (RANK 147)
Male- 62.80 years
Female- 65.73 years

Education index: 0473

Mean years of schooling: 5.1 (RANK 65)
GNI (Gross National Income) per capita at PPP: $5350 (RANK
127)

HDI PROGRAMME IN INDIA:

 Unique in its kind

 Preparation of not only national reports but also sub-national human
development reports (HDR)
 Decentralized and integrated the human development concept into its
development agenda at the national, state, as well as district level
 More HDRs have been produced in India than the total number of global
HDRs
 The plan is made by the Planning Commission-United Nations Development
Programme (UNDP) Partnership through the preparation of state human
development reports (SHDR) and District Development Reports (DHDR)
 The human development program started in the 8 th five-year plan (1992-
1997)

 FIRST STATE- MADHYA PRADESH

 The world’s first state HDR was published in Madhya Pradesh in 1995

 Computation of the states HDI as well as HDI for all the districts in the state
made by the state government

 So far 21 states have prepared HDRs

 State governments have initiated the work on district HDRs for 80 districts of
which 23 HDRs have been released to date

 2009- The first city HDR (MUMBAI) was launched

 STATE LIFE EXPECTANCY (YEARS)
KERALA 74.0
PUNJAB 69.4
MAHARASHTRA 67.2
JHARKHAND, CHHATTISGARH, 58.0
MADHYA PRADESH

KERALA- THE HIGHEST HDI STATE

HDI-0.764
LITERACY RATE- 93.91%
LIFE EXPECTANCY- 74%
HIGHEST SEX RATIO- 1084/1000
LEAST CORRUPTED STATE
CLEANEST AND HEALTHIEST STATE

IMPORTANCE OF HDI:

 The HDI gives an overall index of economic development

 It does give a rough ability to make comparisons on
issues of economic welfare- much more than just using
GDP statistics show
 It gives an idea regarding areas of development that
requires improvement
 Statistics give better decision making for areas having
wide disparity
 More focus on social and human development rather
than only capital accumulation and growth

LIMITATIONS OF HDI
  Wide divergence within countries. For example,
countries like China and Kenya have widely different HDI
scores depending on the region in question. (Eg: North
China is poorer than the southeast)
 Economic welfare depends on several other factors, such
as the threat of war, levels of pollution, access to clean
drinking water, etc.
 GNI does not show how the income is spent by the
government. Some countries spend more on the military
than on healthcare.
 When knowledge is measured it only takes into account
what children learn at school not in the family. And so
maybe knowledge statistics may be distorted if the
family plays more of a role in education in the home.
 Longevity can also be distorted as the life expectancy of
a person does not consider how healthy life was led.
 Life expectancy value for a country is the given average
of the total population. Many communities in the
country will not at all have access to good healthcare
services and so there will be variations in life expectancy
values.

THE CASE OF BHUTAN

 Bhutan is the only country in the world to
officially proclaim gross national happiness
(GNH) as the measure of the country’s progress.
 Material progress and technological
developments are approached more cautiously
taking into consideration the possible harm they
might bring to the environment or the other
aspects of the cultural and spiritual life of the
Bhutanese.
 This simply means material progress cannot
come at the cost of happiness. GNH encourages
us to think of the spiritual, non-material, and
qualitative aspects of development.

WHY INDIA IS LAGGING IN HDI?

o A Large number of the population in India lives in slums that are around 158.4
million.
o 42% of children below 5 years of age are underweight and 59% are stunted.
o Low spending on education by the government.
 o Lack of schemes for urban poor like NRHM etc.
o India treats its environment poorly, Ranks 125 out of 132 countries in a study
done by Yale University.

CONCLUSION :

 The HDI gives an overall index of economic development.

 There are certain differences among different states’ development conditions so there
must be equal opportunities for development for all.
 Some important issues are missing in HDI such as infrastructure and some economic
factors.