Everything About Human Development Index

About Human Development Index

 

The Human Development Index (HDI) is a statistic developed by the United Nations that measures the social and economic development standards of nations. 

 

It consists of four main core components of interest that are taken under consideration: mean years of schooling, expected years of schooling, life expectancy at birth, and gross national income per capita. 

 

This has been widely adopted as a tool not only to follow changes in development levels over time but also to compare the development levels of various countries.

 

The Human Development Index was initially created to restore focus on individuals. It takes into account more precisely their opportunities to realize satisfying work and lives. 

 

It provides a supplementary metric for evaluating a country's level of development besides considering standard economic growth statistics, such as gross domestic product (GDP). Evaluating a country's level of individual human development can also be used to examine the various policy choices of nations.

 

How Is the HDI Measured?

 

As the HDI measures basic achievement levels in human development, it is pertinent to understand the factors and metrics that are considered while evaluating a country's human development and growth. 

 

The computed HDI of a country is an average of indexes of each and every life aspect that is examined: a long and healthy life, knowledge and a decent standard of living. Each of the above four components is measured on a scale between 0 to 1. Once this is done, the geometric mean of the three components is calculated.

 

Now coming to each of the aspects to be considered in particular, the health aspect of the HDI is measured by the life expectancy, as calculated at the time of birth, in each country. This component is considered to be equal to 0 when life expectancy is 20 and equal to 1 when life expectancy is 85. 

 

According to Investopedia, presently, there are two levels for measuring the educational development of a country: the mean years of schooling for citizens of a country along with the expected years of schooling that a child has at the average age for starting school. 

 

15 mean years of schooling equals one on the separate normalization levels while 18 years of expected schooling equals one. Once this is done, a simple mean of the two is calculated. GNI per capita based on purchasing power parity (PPP) is used to represent the standard of living, as a standard was chosen metric that reflects average income. 

 

According to the normalization standards, GNI per capita of $75,000 equals one while GNI per capita of $100 equals 0. A geometric mean of the three components is calculated by taking the cube root of the product of the normalized component scores that yields the final Human Development Index score.

 

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Limitations of the Index

 

Recently, many social advocates have criticized HDI as, in their view, it does not represent a fair amount of measure regarding the quality of life. It provides limited information that can prove useful beyond the usual measures of the economic standard of living.

 

The HDI is a simplification and evaluates human development in limited terms. It does not particularly highlight factors, such as empowerment movements or overall levels of security. 

 

For recognising these factors, the Human Development Report Office (HDRO) provides additional composite indices to evaluate other life aspects, such as inequality issues like gender disparity or racial inequality.

 

All important factors need to be examined for evaluating a country's human development index. These factors include the country's rate of economic growth, expansion of employment opportunities, and the success of initiatives undertaken to improve the existing quality of life within a nation.

 

Several economists consider HDI to be essentially redundant owing to the high correlations between the HDI, its components, and simpler measures of income per capita. GNI per capita (or even GDP per capita) correlates much with both the overall HDI and the other two components in terms of both values and rankings. 

 

Due to these strong correlations, economists are of the opinion that it would be simpler if only per capita GNI across countries is taken for comparison. It will save time and resources that would otherwise be needed for collecting data to provide the additional components. These extra components provide little or no additional information to the overall index that can be of significant importance. (Reference)

 

In fact, a fundamental principle of the composite index design is to leave the multiple additional components that are strongly correlated such that they might highlight the same underlying phenomenon or criterion. 

 

This way inefficient double counting can be prevented along with avoiding the introduction of additional sources of potential errors in the data. When it comes to HDI, the inclusion of these multiple components and parameters is highly problematic because of two conditions.

 

First of all, it is highly plausible that higher average incomes directly lead to both more investment in formal education and better health and longevity. And secondarily, definitions and parameters like measurement of years of schooling and life expectancy can vary widely from country to country.

 

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Ending Note 

 

HDI, being a summary measure of human development measures a country's average achievements in three basic aspects of human development: health, knowledge and standard of living. 

 

It takes into account a long and healthy life, as measured by life expectancy at birth; knowledge, as measured by mean years of schooling and expected years of schooling; and a decent standard of living, as measured by GNI per capita in US$.

 

The higher a country's human development, the higher its HDI value, which is expressed as a value between 0 and 1. HDI shows where each country stands in relation to goalposts that are the minimum and maximum limits for each dimension.

 

The HDI was developed for focusing on the fact that people and their capabilities should be considered the ultimate criteria for assessing the development of a country, instead of stressing only on economic growth.

 

The HDI also highlights differences within countries, between provinces or states, and across genders, ethnicities and other socioeconomic groups. The HDI also questions national policy choices and how two countries with the same level of income per person can vary widely In terms of human development outcomes. 

 

For instance, two nations may have similar incomes per person but can have a different life expectancy and literacy levels, leading to one of the countries having a much higher HDI than the other. These differences have led to debates on government policies regarding health and education. This way, HDI helps in outlining as to what all factors determine what a country can achieve, that can be beyond the reach of another country at the same time.

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