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The Human Development Indices

The Human Development Indices. Oxford, Sep 14 2004 Claes Johansson United Nations Development Programme Human Development Report Office. The Human Development Indices. The HDI (Human Development Index) - a summary measure of human development The GDI (Gender-related Development Index)

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The Human Development Indices

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  1. The Human Development Indices Oxford, Sep 14 2004 Claes Johansson United Nations Development Programme Human Development Report Office

  2. 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

  3. 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$)

  4. 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!

  5. 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

  6. Goalposts for calculating the HDI

  7. A long and healthy life Life Expectancy Life Expectancy Index Calculating the HDI Being Knowledgeable Literacy & Enrolment Education Index A decent standard of living GDP per capita GDP Index Dimensions: Indicators: Dimension index The HDI

  8. 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 0.433 780 0.34 41.4 0.27 0% 0% 0 100 0 25 years 0 0 (log scale) 0.27 + 0.68 + 0.34 =0.433 3

  9. 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

  10. 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

  11. Average absolute rank change with changing weights

  12. Correlation with the HDI with increasing weights by subcomponent

  13. 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

  14. Critiques of the HDI • 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? Critiques

  15. Critiques, cont. ‘Missing’ components • What about future generations – an environmental degradation component? • Political freedoms and rights? • Culture • Nutritional status • Uncertainty • Personal security

  16. 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

  17. 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

  18. 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

  19. 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

  20. 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?

  21. 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

  22. 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

  23. 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

  24. 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

  25. 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

  26. 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

  27. 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)

  28. Other indices The deprivational perspective • HDI and GDI focus on national averages (conglomerative aspect) • HPI focuses on the worst off (deprivational aspect)

  29. 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

  30. Other indices Dimensions: Indicators: A long and healthy Probability at birth of not life surviving until age 40 Knowledge Adult illiteracy rate A decent standard Access to safe water and children underweight for age The Human Poverty Index for developing countries (HPI-1)

  31. Other indices The Human Poverty Index (HPI-1) Where: P1=Probability of not surviving to age 40 (times 100) P2=Adult 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), =∞ tsets HPI = highest value (no substitutability). In he global HDR =3, giving additional but not overwhelming weight to areas of most acute deprivation

  32.  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), • =∞ HPI = highest value (no substitutability). • In the global HDR =3, giving additional but not overwhelming weight to areas of most acute deprivation

  33. Other indices Dimensions: Indicators: A long and healthy Probability at birth of not life surviving until age 60 Knowledge Functional illiteracy rate A decent standard Relative income poverty Social exclusion Long-term unemployment The Human Poverty Index for OECD countries (HPI-2)

  34. Other indices The Human Poverty Index (HPI-2) Where: P1=Probability of not surviving to age 60 (times 100) P2=Functional illiteracy rate P3=Relative 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

  35. Other indices • 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 The Gender-related development Index (GDI)

  36. 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.

  37. 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)

  38. Other indices The Gender Empowerment Measure

  39. Other indices • 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 %) The Gender Empowerment Measure

  40. Other indices The Gender Empowerment Measure • Income is not logged in the calculation of the income index. • Again = 2, for moderate penalisation of inequality

  41. Discrimination through the lens of the HDI Life expectancy Literacy Income

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