The Human Development Indices

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The Human Development Indices

• Oxford, Sep 14 2004
• Claes Johansson
• United Nations Development Programme
• Human Development Report Office

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The Human Development Indices

• The HDI (Human Development Index)
• - a summary measure of human development
• The GDI (Gender-related Development Index)
• - the HDI adjusted for gender inequality
• The GEM (Gender Empowerment Measure)
• - Measures gender equality in economic and
  political participation and decision making
• The HPI (Human Poverty Index)
• - Captures the level of human poverty

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The dimensions and indicators of the HDI

• HDI has three dimensions, measured by one or two
  indicators each
• Leading a long and healthy life
• Life expectancy at birth
• Education
• Adult literacy rate
• Gross primary, secondary and tertiary enrolment
• A decent standard of living
• GDP per capita (PPP US)

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What dimensions to include

• The concept of human development has many
  dimensions
• Health, education and standard of living are
  dimensions that are basic and can be measured
• Proposed additions either are hard to measure or
  overlap with existing dimensions - Examples
  political freedom, environment, child mortality
• HD can never be captured in single indicator!

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Combining indicators for the HDI

• In order to create the HDI, goalposts are
  chosen for each indicator
• Using goalposts rather than observed minima and
  maxima allows comparisons over time
• Set with the timeframe 1960-2050
• Also set to allow for disaggregation some
  subgroups can have lower values than observed in
  country data

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Goalposts for calculating the HDI
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Calculating the HDI

• Dimensions
• Indicators
• Dimension
• index

• A long and
• healthy life
• Life
• Expectancy
• Life
• Expectancy
• Index

Being Knowledgeable Literacy Enrolment
Education Index
A decent standard of living GDP per
capita GDP Index
The HDI
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Calculating the HDI an example (Zambia)
Life expectancy index
Education index
Income index
HDI
Literacy (2/3)
Enrolment (1/3)
100
100
1
85 years
1
40,000
1
1
78.1
0.68
49
0.433
0.34
780
41.4
0.27
0
0
0
100
0
25 years
0
0
(log scale)
0.27 0.68 0.34

0.433
3
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The weights in the HDI

• The three dimensions in the HDI health,
  education, standard of living weighted equally
• Equal weighting is not an accident reflects a
  belief that all three are equally important
• Assumption of substitutability central, but
  sometimes forgotten
• Changing the weighting, even drastically, maintain

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Changing weights what would happen?

• How sensitive is the HDI to changing weights?
• Not very for the full set of countries, the
  components are highly correlated
• Does not implicate redundancy in sub-groups,
  large differences in how income is translated
  into other dimensions

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Average absolute rank change with changing weights
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Correlation with the HDI with increasing weights
by subcomponent
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Why include GDP per capita?

• GDP per capita included as a proxy for a decent
  standard of living
• Reflects a number of issues not explicitly
  included the expanding choices available in many
  areas with increasing income
• Logarithm of GDP is used reflects diminishing
  return in expanding choices

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Critiques of the HDI

• Critiques

• Are these all the dimensions of HD?
• Are these indicators good measures of the
  dimensions?
• What about inequality?
• Can it capture policy changes?
• Ranking countries unknown uncertainties
• Why cap values?
• Why have an index at all?

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Critiques, cont.
Missing components

• What about future generations an environmental
  degradation component?
• Political freedoms and rights?
• Culture
• Nutritional status
• Uncertainty
• Personal security

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Critiques incorporated in the HDI
Critiques that have been incorporated

• Absolute maximum and minimum values for each
  indicator
• Supplementing literacy with a second education
  indicator
• Changing the adjustment of GDP per capita

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Political freedom

• Political freedom index (PFI) presented in HDR
  1991
• Meant to be incorporated in the HDI
• Caused technical and political controversy
• Ultimately dropped because of the difficulties of
  measurement

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Key data problems

• Literacy
• Conceptually and practically limited
• Definition and collection of literacy varies
  widely from country to country
• Culturally specific script systems and other
  factors vary across the world
• UNESCO Institute of Statistics LAMP programme

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Key data problems, cont.

• GDP per capita (PPP US)
• Based on the ICP programme, limited to some 60
  countries
• Based on regressions for other countries
• Imperfect measure but certainly better than
  exchange rate terms
• Life expectancy
• Should measure long and healthy life but does
  not take into account health, just length

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Staying power of the HDI
Why has the HDI been successful?

• HDI has become one of the best known and most
  used indicators of development.
• Despite some remaining controversies, broadly
  accepted and used by media, policymakers and
  academics
• What factors likely contributed?

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Staying power of the HDI
Policy relevance, and acceptability

• Underpinned by four aspects
• Conceptual clarity that facilitates its power as
  a tool of communication
• Reasonable level of aggregation
• Use of universal criteria and variables
• Use of standardized international data explicitly
  designed for comparison

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Conceptual clarity

• Specification of the HDI derived from a clearly
  defined concept
• Dimensions and variables correspond to the
  concepts of human development
• Meaning of variables intuitively understandable

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Reasonable level of aggregation

• HDI focuses on a set of universally -applicable
  core issues
• Aggregating too many issues tends to compromise
  analytical usefulness and policy relevance
• Separate indices for e.g. gender empowerment,
  human poverty

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• Universally-relevant concepts and variables
• High degree of consensus that more is better in
  each of the variables
• In contrast with e.g. election frequency, voter
  turnout, share of largest party

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• Uses data that are legitimized through the
  international statistical system
• Of course, still data problems but data have been
  standardized to ensure inter-country comparability

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Appropriate uses of the HDI

• Ordinal vs. cardinal HDI value has a meaning
  but it is not intuitive and should be used
  carefully
• Ranking
• Example reversals in HDI? Arguably meaningful
  exercise, if weights are accepted

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Other indices
The Human Poverty Indices (HPI-1 and HPI-2)

• Whereas HDI measures average achievement, the HPI
  measures deprivations
• Separate indices for developing countries (HPI-1)
  and high-income OECD countries (HPI-2)

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Other indices
The deprivational perspective

• HDI and GDI focus on national averages
  (conglomerative aspect)
• HPI focuses on the worst off (deprivational
  aspect)

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Other indices
Why separate indices

• Distinguishing between developing and OECD
  countries recognized the relative nature of
  poverty
• Allows the use of richer, more appropriate data
• Different deprivations are more relevant in
  different contexts

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Other indices

• The Human Poverty Index for developing countries
  (HPI-1)

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Other indices

• The Human Poverty Index (HPI-1)

Where
P1Probability of not surviving to age 40 (times
100)
P2Adult illiteracy rate
P3 Average of people without access to safe
water and children underweight
As ? rises greater weight is given to the
dimension in which there is most deprivation. ?1
implies simple average (perfect
substitutability), ?8 tsets HPI highest value
(no substitutability). In he global HDR ?3,
giving additional but not overwhelming weight to
areas of most acute deprivation
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? in the HPI formula

• As ? rises greater weight is given to the
  dimension in which there is most deprivation.
• ?1 implies simple average (perfect
  substitutability),
• ?8 HPI highest value (no substitutability).
• In the global HDR ?3, giving additional but not
  overwhelming weight to areas of most acute
  deprivation

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Other indices

• The Human Poverty Index for OECD countries (HPI-2)

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Other indices

• The Human Poverty Index (HPI-2)

Where
P1Probability of not surviving to age 60 (times
100)
P2Functional illiteracy rate
P3Relative income poverty (population below 50
median income)P4 Long-term unemployment
As ? rises greater weight is given to the
dimension in which there is most deprivation. In
the global HDR ?3, giving additional but not
overwhelming weight to areas of most acute
deprivation
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Other indices

• The Gender-related development Index (GDI)

• Same components as the HDI
• After calculating dimension index for each sex
  they are combined in a way to penalize gender
  equality (equally distributed index)
• The GDI is calculated by taking the unweighted
  average of the three equally distributed indices

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Other indices

• The Gender-related development Index (GDI)

Formula for the equally distributed index
determines the size of gender equality in a
society. In the global HDR it is set at 2.
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Goalposts for calculating the GDI
Other indices
Maximum Value
Minimum value
Indicator Life expectancy Female
27.5 years 87.5 years Male
22.5 years 82.5 years Adult
literacy 100
0 Gross enrolment 100
0 GDP per capita
40,000(US) 100(US)
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Other indices

• The Gender Empowerment Measure

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Other indices

• The Gender Empowerment Measure

• Calculate dimension index and equally distributed
  equivalent percentage (EDEP) for each dimension
  (like GDI)
• For political and economic decision making divide
  EDEP by 50 (the ideal share women should have)
• N.B. For political and economic decision making
  EDEP can be calculated directly (as indicators
  are already )

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Other indices
The Gender Empowerment Measure

• Income is not logged in the calculation of the
  income index.
• Again 2, for moderate penalisation of
  inequality

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Discrimination through the lens of the HDI
Life expectancy
Literacy
Income