A statistical measure used to assess the social and economic development of countries around the world The Human Development Index (HDI) is a statistical measure (composite index) developed by the United Nations to assess the social and economic development of countries around the world. The HDI considers three indicators of human development, namely, life expectancy, education, and per capita income.  Pakistani economist Mahbub ul Haq developed the Human Development Index in 1990. The measure is an alternative to the standard metrics of development of countries, which consider only the economic part of a country’s development. The HDI provides a better picture of a nation’s development because it incorporates primary social and economic factors. Also, the HDI emphasizes the importance of individuals and their ability to unleash their maximum potential. In addition to the standard HDI, there is also the Inequality-adjusted Human Development Index. The Inequality-adjusted HDI assesses the levels of human development with consideration of economic inequality. It is thought that the Inequality-adjusted HDI reveals the actual levels of human development in a country, while the HDI shows the theoretical levels of development if there were no inequality in a country. Dimensions of the Human Development IndexThe Human Development Index considers three main dimensions to evaluate the development of a country: 1. Long and healthy lifeThe long and healthy life dimension is measured by life expectancy at birth. The life expectancy at birth is a statistical measure that an average individual is expected to live based on certain demographic factors such as the year of birth and current age. 2. EducationEducation is the second dimension in the HDI. The indicators of education are the expected years of schooling and the mean years of schooling. According to the UN, the average maximum years of schooling is 18 years, while the mean maximum years of schooling is 15 years. 3. Standard of livingThe standard of living is usually measured by the gross national income (GNI) per capita. The GNI indicates the total domestic and foreign output created by the residents of a certain country. Limitations of the Human Development IndexDespite the revolutionary idea behind the concept of the Human Development Index, the statistical measure is greatly simplified. The current version of the HDI calculations considers only a few factors that affect a country’s development. However, other factors such as employment opportunities, empowerment movements, and feeling of security can be added to the index calculation to come up with a more accurate analysis. Additional ResourcesThank you for reading CFI’s guide to Human Development Index. To keep advancing your career, the additional CFI resources below will be useful:
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.
The Human Development Index (HDI) is a statistic composite index of life expectancy, education (mean years of schooling completed and expected years of schooling upon entering the education system), and per capita income indicators, which is used to rank countries into four tiers of human development. A country scores a higher level of HDI when the lifespan is higher, the education level is higher, and the gross national income GNI (PPP) per capita is higher. It was developed by Pakistani economist Mahbub ul Haq and was further used to measure a country's development by the United Nations Development Programme (UNDP)'s Human Development Report Office.[1][2][3] The 2010 Human Development Report introduced an Inequality-adjusted Human Development Index (IHDI). While the simple HDI remains useful, it stated that "the IHDI is the actual level of human development (accounting for inequality), while the HDI can be viewed as an index of 'potential' human development (or the maximum level of HDI) that could be achieved if there were no inequality."[4] The index is based on the human development approach, developed by Mahbub ul Haq, anchored in Amartya Sen's work on human capabilities, often framed in terms of whether people are able to "be" and "do" desirable things in life. Examples include – being: well fed, sheltered, healthy; doing: work, education, voting, participating in community life. The freedom of choice is central – someone choosing to be hungry (e.g. when fasting for religious reasons) is quite different from someone who is hungry because they cannot afford to buy food, or because the country is in a famine.[5] The index does not take into account several factors, such as the net wealth per capita or the relative quality of goods in a country. This situation tends to lower the ranking for some of the most advanced countries, such as the G7 members and others.[6] OriginsThe origins of the HDI are found in the annual Human Development Reports produced by the Human Development Report Office of the United Nations Development Programme (UNDP). 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". Haq believed that a simple composite measure of human development was needed to convince the public, academics, and politicians that they can and should evaluate development not only by economic advances but also improvements in human well-being. Dimensions and calculationNew method (2010 HDI onwards)
Published on 4 November 2010 (and updated on 10 June 2011), the 2010 Human Development Report calculated the HDI combining three dimensions:[7][8]
In its 2010 Human Development Report, the UNDP began using a new method of calculating the HDI. The following three indices are used: 1. Life Expectancy Index (LEI)
=
LE
−
20
85
−
20
{\displaystyle ={\frac {{\textrm {LE}}-20}{85-20}}}
2. Education Index (EI)
=
MYSI
+
EYSI
2
{\displaystyle ={\frac {{\textrm {MYSI}}+{\textrm {EYSI}}}{2}}}
3. Income Index (II)
=
ln
(
GNIpc
)
−
ln
(
100
)
ln
(
75
,
000
)
−
ln
(
100
)
{\displaystyle ={\frac {\ln({\textrm {GNIpc}})-\ln(100)}{\ln(75,000)-\ln(100)}}}
Finally, the HDI is the geometric mean of the previous three normalized indices:
HDI
=
LEI
⋅
EI
⋅
II
3
.
{\displaystyle {\textrm {HDI}}={\sqrt[{3}]{{\textrm {LEI}}\cdot {\textrm {EI}}\cdot {\textrm {II}}}}.}
LE: Life expectancy at birth Old method (HDI before 2010)The HDI combined three dimensions last used in its 2009 report:
This methodology was used by the UNDP until their 2011 report. The formula defining the HDI is promulgated by the United Nations Development Programme (UNDP).[12] In general, to transform a raw variable, say
x
{\displaystyle x}
where
a
{\displaystyle a}
The Human Development Index (HDI) then represents the uniformly weighted sum with 1⁄3 contributed by each of the following factor indices:
2021 Human Development Index (2022 report)
The Human Development Report 2022 by the United Nations Development Programme was released on 8 September 2022 and calculates HDI values based on data collected in 2021. The following countries ranked from 1 to 66 in the year 2021 are considered to be of "very high human development":[13]
Past top countriesThe list below displays the top-ranked country from each year of the Human Development Index. Norway has been ranked the highest sixteen times, Canada eight times, Japan and Iceland twice and Switzerland once. In each original HDIThe year represents the time period from which the statistics for the index were derived. In parentheses is the year when the report was published.
Geographical coverageThe HDI has extended its geographical coverage: David Hastings, of the United Nations Economic and Social Commission for Asia and the Pacific, published a report geographically extending the HDI to 230+ economies, whereas the UNDP HDI for 2009 enumerates 182 economies and coverage for the 2010 HDI dropped to 169 countries.[15][16] Country/region specific HDI lists
CriticismThe Human Development Index has been criticized on a number of grounds, including alleged lack of consideration of technological development or contributions to the human civilization,[citation needed] focusing exclusively on national performance and ranking, lack of attention to development from a global perspective, measurement error of the underlying statistics, and on the UNDP's changes in formula which can lead to severe misclassification in the categorisation of "low", "medium", "high" or "very high" human development countries.[17] Sources of data errorEconomists Hendrik Wolff, Howard Chong and Maximilian Auffhammer discuss the HDI from the perspective of data error in the underlying health, education and income statistics used to construct the HDI. They identified three sources of data error which are due to (i) data updating, (ii) formula revisions and (iii) thresholds to classify a country's development status and conclude that 11%, 21% and 34% of all countries can be interpreted as currently misclassified in the development bins due to the three sources of data error, respectively. The authors suggest that the United Nations should discontinue the practice of classifying countries into development bins because: the cut-off values seem arbitrary, can provide incentives for strategic behavior in reporting official statistics, and have the potential to misguide politicians, investors, charity donors and the public who use the HDI at large.[17] In 2010, the UNDP reacted to the criticism and updated the thresholds to classify nations as low, medium, and high human development countries. In a comment to The Economist in early January 2011, the Human Development Report Office responded[18] to a 6 January 2011 article in the magazine[19] which discusses the Wolff et al. paper. The Human Development Report Office states that they undertook a systematic revision of the methods used for the calculation of the HDI, and that the new methodology directly addresses the critique by Wolff et al. in that it generates a system for continuously updating the human-development categories whenever formula or data revisions take place. In 2013, Salvatore Monni and Alessandro Spaventa emphasized that in the debate of GDP versus HDI, it is often forgotten that these are both external indicators that prioritize different benchmarks upon which the quantification of societal welfare can be predicated. The larger question is whether it is possible to shift the focus of policy from a battle between competing paradigms to a mechanism for eliciting information on well-being directly from the population.[20] See alsoIndices
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External links
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