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Human Development Index

The document discusses the Human Development Index (HDI), which is a composite statistic used by the UN to rank countries based on their level of human development. The HDI is comprised of indicators on life expectancy, education, and income. It was created by the UNDP to evaluate development based on improvements in human well-being rather than just economic factors. The HDI combines metrics on health, knowledge, and standard of living to provide a summary measure of a nation's human development achievements.

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335 views3 pages

Human Development Index

The document discusses the Human Development Index (HDI), which is a composite statistic used by the UN to rank countries based on their level of human development. The HDI is comprised of indicators on life expectancy, education, and income. It was created by the UNDP to evaluate development based on improvements in human well-being rather than just economic factors. The HDI combines metrics on health, knowledge, and standard of living to provide a summary measure of a nation's human development achievements.

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DEVELOPMENT INDEX

INTRODUCTION
Human Development: Indias high growth rates have been a matter of boastful selfcongratulatory publicity for the Indian Government, with the recent recession being projected
as a temporary setback, soon to be overcome. The latest Human Development Report
released by the UNDP in India recently serves to confront and challenge the tall claims with
the rude realities of Indias poor human development performance in the very midst of its
much-touted economic success story.
HUMAN DEVELOPMENT INDEX
The HDI human development index is a summary composite index that measures a
country's average achievements in three basic aspects of human development: health,
knowledge, and a decent standard of living. Health is measured by life expectancy at birth;
knowledge is measured by a combination of the adult literacy rate and the combined primary,
secondary, and tertiary gross enrolment ratio; and standard of living by GDP per
capita (PPP US$).
The Human Development Index (HDI) is a composite statistic used to rank countries by level
of "human development" and separate developed (high development), developing (middle
development), and underdeveloped (low development) countries. The statistic is composed
from data on life expectancy, education and per-capita GDP (as an indicator of standard of
living) collected at the national level using the formula given in the Methodology section
below.
The origins of the HDI are to be found in the United Nations Development Programme's
(UNDP) Human Development Reports (HDRs). These were devised and launched by
Pakistani Economist Mahbub ul Haq in 1990 and had the explicit purpose: to shift the focus
of development economics from national income accounting to people centered policies. To
produce the HDRs, Mahbub ul Haq brought together a group of well known development
economists including: Paul Streeten, Frances Stewart, Gustav Ranis, Keith Griffin, Sudhir
Anand and Meghnad Desai. But it was Amartya Sens work on capabilities and functionings
that provided the underlying conceptual framework. Haq was sure that a simple composite
measure of human development was needed in order to convince the public, academics, and
policy-makers that they can and should evaluate development not only by economic advances
but also improvements in human well-being. Sen initially opposed this idea, but he went on
to help Haq develop the Human Development Index (HDI). Sen was worried that it was
difficult to capture the full complexity of human capabilities in a single index but Haq
persuaded him that only a single number would shift the attention of policy-makers from
concentration on economic to human well-being.
The HDI has been used since 1990 by the United Nations Development Programme for its
annual Human Development Reports.
Human Development Index measures achievements on average on the basis of three
following criteria. Areas which are of significance to human development:
Life expectancy at birth which measures the longevity of life.

Knowledge which is based on the following two factors:


Adult literacy rate
Gross enrolment ratio at primary, secondary and tertiary level.
Per capita GDP measures the standard of living of the people.

On the basis of above criteria an index is created for each of the above dimensions.
This is done on the basis of maximum and minimum values for each of the above three
indicators.
Table: Maximum and Minimum Values for Calculating HDI

The actual values for each country are compared with the maximum and minimum value and
for each country the values of all the indicators would range between 0 and 1. The following
formula is used:

Three dimensions in the HDI:


The HDI combines three dimensions:

Life expectancy at birth, as an index of population health and longevity


Knowledge and education, as measured by the adult literacy rate (with two-thirds
weighting) and the combined primary, secondary, and tertiary gross enrolment ratio
(with one-third weighting).
Standard of living, as indicated by the natural logarithm of gross domestic product per
capita at purchasing power parity.

The Human Development Index (HDI) then represents the uniformly weighted sum with
contributed by each of the following factor indices:
A) Life Expectancy Index:
Life expectancy is the expected (in the statistical sense) number of years of life remaining at
a given age. Life expectancy is usually calculated separately for males and females. Females
live longer than males in countries with modern obstetric care.

B) Education Index:
The Education Index is measured by the adult literacy rate (with two-thirds weighting) and
the combined primary, secondary, and tertiary gross enrolment ratio (with one-third
weighting). The adult literacy rate gives an indication of the ability to read and write, while
the GER gives an indication of the level of education from kindergarten to postgraduate
education. Education is a major component of well-being and is used in the measure of
economic development and quality of life, which is a key factor determining whether a
country is a developed, developing, or underdeveloped country.

c) Adult literacy index:


The Adult literacy index (ALI) is a statistical measure used to determine how many adults
can read and write in a certain area or nation. Adult literacy is one of the factors in measuring
the Human Development Index (HDI) of each nation, along with life expectancy, education,
and standard of living. The equation for calculating the Adult Literacy Index is:

The gross enrolment ratio (GER) or gross enrolment index (GEI) is a statistical measure
used in the education sector and by the UN in its Education Index. The GER gives a rough
indication of the level of education from kindergarten to postgraduate education known in
the UK and some other countries (mostly in the Commonwealth of Nations) as primary,
secondary, and/or tertiary amongst residents in a given jurisdiction.
In the UN, the GER is calculated by expressing the number of students enrolled in primary,
secondary and tertiary levels of education, regardless of age, as a percentage of the
population of official school age for the three levels

D) Gross domestic product:


The gross domestic product (GDP) or gross domestic income (GDI) is a measure of a
country's overall economic output. It is the market value of all final goods and services made
within the borders of a country in a year. It is often positively correlated with the standard of
living, alternative measures to GDP for that purpose.
Gross domestic product comes under the heading of national accounts, which is a subject in
macroeconomics. GDP can be determined in three ways, all of which should in principle give
the same result. They are the product (or output) approach, the income approach, and the
expenditure approach.

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