HUMAN

DEVELOPMENT
INDEX
INDEX
Introduction​
How to Measure
HDI Rankings
Limitations of the HDI
Pros and Cons
​Summary​
Bibliography
INTRODUCTION
HDI 4

What is Human Development Index

The Human Development Index is a statistic developed and compiled by the
United Nations since 1990 to measure various countries’ social and economic
development levels. It comprises four principal areas of interest: mean years of
schooling, expected years of education, life expectancy at birth, and gross
national income per capita.

The HDI was established to place emphasis on individuals—or, 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 is a tool used to follow changes in development levels over time and
compare the development levels of different countries.

The higher the HDI, the better. A high HDI essentially means that the country in
question offers a generally high standard of living, with decent healthcare,
education, and opportunities to earn money.
 HDI 5

Role of Digitization in Human Development Index

Digitization plays a pivotal role in enhancing the accuracy, efficiency, and

relevance of the Human Development Index (HDI) by transforming the
way data is collected, processed, and analyzed. Through digital technology,
timely and comprehensive information is accessible, enabling a more
nuanced understanding of human development. Electronic health records,
online education platforms, and digital economic data collection contribute
to a more accurate assessment of health, education, and economic
indicators. Digitization empowers policymakers to make informed
decisions, fostering inclusive development that aligns with the evolving
needs of societies in the digital age
HOW TO MEASURE
HDI 7

HOW IS HDI MEASURED?

The HDI is a summary measurement of basic achievement levels in human
development. The computed HDI of a country is an average of indexes of
each of the life aspects that are examined: knowledge and understanding, a
long and healthy life, and an acceptable standard of living. Each of the
components is normalized to a scale between 0 and 1, and then the
geometric mean of the three components is calculated.2

The final HDI score for each country is calculated as a geometric mean of the
three components by taking the cube root of the product of the normalized
component scores.
 HDI 8

•The health aspect of the HDI is measured by the life expectancy, as calculated at
the time of birth, in each country, and normalized so that this component is equal
to 0 when life expectancy is 20 and equal to 1 when life expectancy is 85.3

•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. These are each separately normalized so that both 15
mean years of schooling and 18 years of expected schooling equal 1, and a simple
mean of the two is calculated.3

•The economic metric chosen to represent the standard of living is GNI per
capita based on purchasing power parity (PPP), a common metric used to reflect
average income. The standard of living is normalized so that it is equal to 1 when
GNI per capita is $75,000 and equal to 0 when GNI per capita is $100.4
HDI RANKINGS
HDI 10

Top 25 HDI rankings

HDI 11

Bottom 5 HDI Rankings

In the latest HDI ranking, from 2022, Switzerland finished first with an HDI value of 0.962. Norway,
Iceland, Hong Kong, and Australia rounded out the top five. Meanwhile, the United States was ranked just
21st with an HDI value of 0.921.
LIMITATIONS OF HDI
HDI 13

There are criticisms of the HDI. It 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 U.N. Human Development Report Office (HDRO) provides
additional composite indices to evaluate other life aspects, including
inequality issues such as gender disparity or racial inequality.6
Examination and evaluation of a country’s HDI are 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.
Several economists say the HDI is essentially redundant as a result of
the high correlations among the HDI, its components, and simpler
measures of income per capita. GNI per capita (or even GDP per
capita) correlates very highly with both the overall HDI and the other
two components in both values and rankings.
HDI 14

Given these strong and consistent correlations, they say, it would be

simpler and clearer to just compare per-capita GNI across countries
than to spend time and resources collecting data for the additional
components that provide little or no additional information for the
overall index.

Indeed, a fundamental principle of the composite index design is to

not include multiple additional components that are strongly
correlated in a way that suggests that they might reflect the same
underlying phenomenon. This is to prevent inefficient double counting
and avoid introducing additional sources of potential errors in the
data.
In the case of the HDI, the inclusion of the components is problematic
because it is easily plausible that higher average incomes directly lead
to both more investment in formal education and better health and
longevity. Moreover, definitions and measurements of years of
schooling and life expectancy can vary widely from country to country.
PROS AND CONS OF HDI
HDI PROS CONS 16

•Holistic Measurement: HDI provides a 1. Simplicity Overshadowing

comprehensive view of development by Complexity: HDI's simplicity can
considering health, education, and overlook complex development factors,
economic dimensions, offering a more well- potentially leading to incomplete
rounded assessment compared to solely assessments.
economic indicators. 2. Indicator Limitations: Certain
•Comparative Analysis: It facilitates cross-
dimensions of development, like
country comparisons, enabling environmental sustainability and
governments and international political freedoms, are not included,
organizations to identify patterns, limiting the index's scope.
successes, and areas for improvement in
3. Equal Weighting Critique: Equal
human development.
•Human-Centric Approach: HDI weighting of dimensions might not
accurately reflect the relative
prioritizes people's well-being, shifting the
importance of each aspect in different
focus from economic growth alone to
contexts.
quality of life, education, and health
outcomes. 4. Inequality Ignored: HDI doesn't
•Policy Guidance: Governments can use account for inequalities within
HDI data to formulate targeted policies that countries, which can be significant and
address specific development shortcomings influence development outcomes.
and inequalities. 5. Omission of Cultural Factors: HDI's
•Advocacy Tool: HDI raises awareness standard indicators may not capture
about development disparities, cultural variations in what constitutes
encouraging international collaboration development and well-being.
and aid to support less developed regions
HDI 17

CONCLUSION
The United Nations' Human Development Index (HDI) seeks to quantify a
country's level of prosperity based on both economic and non-economic
factors. Non-economic factors include life expectancy, and educational
attainment. Economic factors are measured by gross national income
(GNI) per-capita. While the U.N. argues that the HDI improves our
understanding of relative well-being around the world, economists have
criticized the index as overly simplistic and flawed in its methodology.
HDI 18

BIBLIOGRAPHY
https://www.investopedia.com/terms/h/human-development-index-hdi.asp

https://www.legacyias.com/human-development-index/

https://ourworldindata.org/human-development-index

https://prosancons.com/business/pros-and-cons-of-human-development-in
dex-hdi/
THANK YOU

By
Hurita Lal
Class - XI-C
Roll no- 9