Measuring human development using composite Indices

1
Measuring human development using composite
Indices
2
The human development indices at the forefront
of HD measurement development

• 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
• Others

3
What is a composite indicator?

• A simplistic presentation and comparison of
• performance in a given area to be used as
• a starting point for future analysis.
• - OECD, an information server on composite
  indicators
• provides a clue to a matter of larger
• significance or make perceptible a trend or
• phenomenon that is not immediately
• detectable.
• - Hammond et al, 1995

4
Composite indicators a compromise

• Pros
• Summarize complex, multidimensional issues
• Facilitate comparisons based on big pictures
  instead of many separate indicators
• Attract public interest, support policy-makers
• Others?
• Cons
• Simplistic
• Could be misleading (assuming substitutability)
• Subjective choices
• Others?

5
To be effective, a composite indicator should be

• Conceptually clear (core dimensions
  relationships)
• Policy relevant (priority areas)
• Components measurable
• Methodology simple and transparent.

6
Why the HDI?

• The fundamental conceptual shift
• Human development is both an outcome and a
  process of enlarging peoples choices to lead
  lives they value
• Economic growth is only a means, though an
  important one, for human development.
• Human development accounting breath vs focus

7
The need for a summary measure -

• Give me a measure a single measure which is
  as vulgar as GNP per capita, but not as
  insensitive to broader aspects of human lives.
• Mahbubul Haq
• An advocacy tool for new thinking
• To focus attention w/ simplicity
• Combination of economic and social factors

8
Break away from the GDP dominance
HDR 2004
9
(No Transcript)
10
The success of the HDI

• Focus on the most basic dimension w/ universal
  value (the more comprehensive, the weaker)
  attracted attentions!
• Though still contested by some of its validity,
  widely accepted powerful advocate
• Generate healthy competition and create
  political will for change
• Identify priority indicators for further
  development and weakness in existing data
  (Philippines official statistics)
• Spur the construction of other indices

11
The use of the HDI beyong advocacy

• Monitoring progress (but short-term change?
  yearly change in global Report?)
• Shift policy focus Philippines threshold level
  for basic social services Bolivia Ministry for
  HD
• Basis for allocating resources (appropriate?)
  Brazil Egypt India Mexico Merck HIV drug
  discount
• Others?

12
The limitations of the HDI

• Not a comprehensive measure of HD (door to the
  house, rescue HD from the HDI)
• Not adequate for short-term impact of policy
  changes
• Hampered by lack of relevant data comparability
  and reliability of data (existing measures
  capture analytical concept?)
• Others?

13
Going beyond national averages

• In South Africa, HDI is 0.531 for Northern
  Province compared to 0.712 for Gauteng
• In India, HDI for untouchables (0.239) is
  almost half
• that for Brahmins (0.439)
• In the United States, HDI for White Americans
  0.870
• African Americans 0.805 Hispanic Americans
• 0.756
• Powerful tool esp. when combining disaggregated
  HDI and trend analyses
• But how far do we go?

14
Other innovations with HDI analytical/policy
relevance

• Selection of indicators
• E.g., India HDR2001
• Focus/extension of dimensions
• E.g., South Africa HDR 1998
• Arab HDR2002 AHDI
• Variations in weights
• E.g., India HDR2001
• Adjusting for inequality
• E.g., HDR 1993 Mexico NHDR 2002

15
Way forward?
16
http//hdr.undp.org/statistics