A Detailed Discussion On Concept Of The Human Development Index

The Human development index is a summary measure of human development. It aims to capture the policymakers, non-governmental organisations and media’s attention to use the human outcomes instead of economic growth. It supports the concept that it is the individual’s living standards (health, wealth, education and life span) that should be the ultimate criteria for evaluating the development of a country. Mahbub ul Haq, a Pakistani economist, politician, international development theorist, and Minister of Finance of Pakistan, first introduced this concept in the Annual Human Development Index (HDI) Report. It is only an overview of the concept of the HDI. This article by The Academic Papers UK will further discuss the HDI concept by dividing it into three sessions (session one will provide a brief history of HDI, session two will describe its importance, and session three will describe its meaning and method of calculation).      

Who Gave Concept Of HDI?

The concept of HDI was first presented in the Annual Human Development Report of the United Nations Development Program (UNDP). Mahbub ul Haq (a Pakistani economist) first gave the concept of HDI in 1990. He explained that his purpose behind devising HDI is to use the people-centric policies instead of national income accounting in development economics. Mahbub ul Haq believed that human development must not be only evaluated by measuring economic advancement, but measuring the improvement in human well-being could also be a suitable method. Thus, Mahbub ul haq, the Pakistani economist, politician, international development theorist, and Minister of Finance of Pakistan (from 1985-1986), was the person who gave the concept of HDI in 1990.

What Is The Importance Of The Human Development Index?

The human development index is an effective method of measuring the overall development of a nation. It includes the socio-economic factors that greatly affect the performance of a country. As it measures the socio-economic factors, it is the most popular tool to find the socio-economic status of the nation throughout the world. Human Development Index, based on its differences from the Human Capital Index, is considered a more reliable indicator of a country’s development.

Furthermore, the HDI presents an overview of economic development in the form of an index. It provides a rough estimate to compare the economic welfare issues. It gives more deeps insights into an economic situation of a country than using GDP analysis. Its importance lies in its ability to show the current progress of a country by measuring how it is doing.

In addition to this, HDI is also important as it provides more information as compared to other methods like the per capita income method of the World Bank. It considers a few main points to measure the progress of a country, namely, wealth, health, education and life expectancy. Thus, its wide range of covering all important aspects of the development of a country makes it the most acceptable development measuring index in the world.  

What Is The Human Development Index, And How It Is Calculated? 

The human development index is the statistical composite index that involves education, life expectancy, wealth and health along with per capita income as indicators to rank countries into tiers of human development. Human development as a whole involves the human conditions by using the capability approach. By adjusting the inequality, HDI measures human conditions in different countries. It is a method of measuring human development by focusing on the social justice instead of measuring a single parameter (economic growth). Thus, the human development index suggests that the country will only rank high when its education level, lifespan, and gross national income (GNI) are higher.   

To describe the human development index in another way, we can say that it is a measurement system that United Nations used to find the human development level in a country. Its components like the average annual income and level of education are the best indicators to rank countries based on the standards of life. No doubt, it is a popular model, but many economists have challenged HDI for including the measures of quality of life that are not broad enough.  

Differences Between The Human Development Index And Inequality-Adjusted Human Development

In the account of the controversial approaches, Inequality-adjusted human development index was introduced (IHDI). HDI only evaluates the average human development capabilities that include education, income and health. But as it is average, it fails to distinguish the inequalities in human development within a country’s population. Even in many cases, countries with different levels of achievement have the same HDI values. Thus, IHDI was introduced to measure human development by measuring the level of inequality within a population along with health, education and income.  

Moreover, IHDI uses a distribution-sensitive class of composite indices (Atkinson family of inequality measures). It uses the inequality-adjusted dimension indices to compute the geometric means. Furthermore, the inequality measure is based on the assumption that each society has a certain level of aversion to inequality. In short, IHDI accounts for measuring the loss in human development by inequality in health, education and income.

Measurements:

As described in the definition, HDI is the method of estimating a country’s progress by taking into account three major social-economic factors, namely, life expectancy, the gross national income per capita and education. Thus, this can be calculated by using this simple formula:

HDI = 3√(LEI.EI.II)

Where,

HDI represents the human development index

LEI= Life expectancy index (dimension= long and healthy life, indicator= life expectancy at birth, and dimension index= life expectancy index) = (LE-20)/(85-20)

EI= Educational index (dimension= Knowledge, indicator = expected years of schooling or mean years of schooling and dimension index= education index) = (MSYI+EYSI)/2 where MYSI (MYSI/15 ) is the mean years of schooling index while EYSI (EYSI/18) is the expected years of schooling index.

II= Income index (dimension= a decent standard of living, indicator= GNI per capita (PPP$), and dimension index= GNI index) = In(GNIpc)-In (100))/(In(75000)-In(100))

In the big picture, the human development index is a composite summary of human developments. Its indicators help economists to rank countries according to their human capabilities. Using a simple formula of HDI, you can easily measure the development of any country of your choice. Moreover, according to HDI 2022, Norway ranks highest with 0.954 HDI values. If you have a research paper to work on HDI and you are unable to do so, you can hire the experts of PhD dissertation writing services.