Chapter 2: QUALITY OF HUMAN LIFE

Introduction A country is formed by the people living in it. When it is said that there is development in the economy, it should obviously mean that the quality of life of the people in the economy is improving.

Measurement of Economic Development – Previously Gross National Product Per Capita Income Other Factors Previously, economic development of any country was measured by gross national product and per capita income However, other factors were completely ignored and only monetary or economic aspect was given extreme importance.

Measurement of Economic Development - Recent Recently there are two approaches developed by economist to measure economic development in terms of quality of life: Physical quality of life Index (P.Q.L.I) Human Development Index (H.Q.I)

Physical quality of life Index (P.Q.L.I)

Overall Infrastructure Meaning of Physical Quality of Life Index Quality of life refers to overall well-being of people of a country. It does not depend on economic factors but on socio-political factors like : Environment Social Security National Security Political Freedom Overall Infrastructure

Indicators of P.Q.L.I Physical Quality of Life Index (P.Q.L.I) was developed by famous economist Morris David in 1979 for 23 developed and developing countries. Morris David used the following three indicators to prepare a composite index known as Physical Quality of Life Index: Life Expectant Rate (L.E.I) Infant Mortality Rate (I.M.I) Basic Literacy Rate (B.L.I)

Indicators of P.Q.L.I Life Expectant Rate Infant Mortality Rate Basic Literacy Rate Any person above the age of 7 year who can read and write in any one language with an ability to understand it is considered as literate Average number of year a person is expected to live Number of infants dying within one year of their birth out of every 1000 births As per 2011 Census As per 2011 Census As per 2011 Census 66.8 years 47 per 1000 74.04%

Calculation of P.Q.L.I Formula to obtain P.Q.L.I = For each of the indicator, the performance of individual country is rated on a scale of 1 to 100 where 1 represents the worst performance and 100 represent the best performance Formula to obtain P.Q.L.I = Example: Suppose, the L.E.I. for India is rated as 75, the I.M.I is rated as 40 and B.L.I. is rated as 65, then the P.Q.L.I will be ? Answer: 60 [(75+40+65)/3]

Smart Code: AHEAD What are the advantages and limitation of P.Q.L.I ? Physical Quality of Life Index (P.Q.L.I) is a composite indicator to measure economic development of a nation. P.Q.L.I is based on three indicators i.e. Life Expectancy Rate, Infant Mortality Rate and Basic Literacy Rate Advantage of P.Q.L.I : A - Aspect of welfare has been considered H - Helps the government for analysis E - Easy to compare A - Also Considers Distribution D - Data required is easily available Smart Code: AHEAD

Advantages of P.Q.L.I A H E A D Aspect of welfare has been considered The three indicator i.e. life expectancy rate, infant mortality rate and literacy rate very well represent the welfare of the people of the country. A country wherein all the three indicators are good can be said to be a developed economy

A H E A D Advantages of P.Q.L.I Helps the government for analysis P.Q.L.I helps to government to understand the overall welfare in the economy and how well its welfare policies are being implemented. This helps the government to take corrective action.

A H E A D Advantages of P.Q.L.I Easy to compare The method followed to measure P.Q.L.I is standard for all the countries. Therefore, it can be used to make comparison between countries and this helps the relatively underdeveloped countries to take corrective measure.

A H E A D Advantages of P.Q.L.I Also Considers Distribution The P.Q.L.I considers the distribution of welfare in the country. A country cannot have a high average of literacy rate, life expectancy and low infant mortality rate unless a large part of the population is covered by the benefits of economic development.

A H E A D Advantages of P.Q.L.I Data required is easily available The data relating to all the three indicators is easily available in the census report. Therefore, measurement of P.Q.L.I is a simple.

Smart Code: MAN Limitations of P.Q.L.I M - Many other factors have been ignored A - All factors have been given equal importance N - Not a proper measure of economic development

M A N Many other factors have been ignored Limitations of P.Q.L.I P.Q.L.I ignores many factors which influence the quality of life such as employment, housing, justice, social security as well as human rights.

M A N All factors have been given equal importance Limitations of P.Q.L.I M A N All factors have been given equal importance P.Q.L.I is a simple average of literacy rate, infant mortality rate and life expectancy rate i.e. all the factors have been giving equal weight age. However, it is difficult to understand the rationale behind giving equal importance to all factors.

M A N Not a proper measure of economic development Limitations of P.Q.L.I M A N Not a proper measure of economic development P.Q.L.I. does not explain the structural change in the economy of a country. Moreover, it does not at all consider economic or monetary concept. Hence, it is a poor measure of economic development as well as economic growth.

Conclusion Inspite of these drawbacks, P.Q.L.I. is considered as an improvement over traditional measure of economic welfare. However, recently developed Human Development Index (HDI) is a better and more refined version of P.Q.L.I.

Human Development Index

What is Human Development ? United Nations Development Programme has defined human development as a process of enlarging peoples’ choices and their level of well-being. Human Development is measured by constructing Human Development Index (H.D.I) According to Human Development Report, the three most important choices of people are: To lead a long and healthy life To enjoy a decent standard of living To acquire knowledge

Importance of Human Development Human development is extremely important and it depends on much more than just growth of income. Importance : 1. It is an End 2. Helps to control population 3. Increases efficiency 4. Other resources are better utilized 5. The society becomes healthy and safe 6. Conservation of environment

Importance of Human Development It is an End Helps to control population Increases efficiency Other resources are better utilized The society becomes healthy and safe Conservation of environment Economic growth is the means and human development is an end. Economic growth enables an economy to improve human condition and enlarge the choices of the people which finally lead to their development.

Importance of Human Development It is an End Helps to control population Increases efficiency Other resources are better utilized The society becomes healthy and safe Conservation of environment Human development includes providing better education facilities. Educated people understand the benefits of having a small family. Increased medical facilities help to reduce the infant mortality rate.

Importance of Human Development It is an End Helps to control population Increases efficiency Other resources are better utilized The society becomes healthy and safe Conservation of environment With human development, there is an improvement in health, nutrition and education. This helps to increase efficiency and productivity of labour.

Importance of Human Development It is an End Helps to control population Increases efficiency Other resources are better utilized The society becomes healthy and safe Conservation of environment The utilization of resources highly depends on the efficiency of the human resource. Since, the efficiency of labour increases, other resources are also better utilized.

Importance of Human Development It is an End Helps to control population Increases efficiency Other resources are better utilized The society becomes healthy and safe Conservation of environment Educated people who are bestowed with proper rights do not get involved in anti-social activities like riots, terrorism, robbery etc. Therefore, a safe and healthy society is created

Importance of Human Development It is an End Helps to control population Increases efficiency Other resources are better utilized The society becomes healthy and safe Conservation of environment Educated people are aware about the negative effect that over population, deforestation, heavy industrialization etc have on the environment. Therefore, they make an extra effort to save the environment.

What is Human Development Index ? Human Development is measured by constructing Human Development Index (H.D.I) The Human Development Index (HDI) is a composite statistic of life expectancy, education, and income indices used to rank countries. It was created by : Pakistani economist Mahbub ul Haq  and Indian economist Amartya Sen  in 1990 and was published by the United Nations Development Programme

How is Human Development Index calculated ? H.D.I. makes it clear that income cannot be considered as a yardstick for measuring human development because well-being depends on use of income and not on level of income For constructing H.D.I, we have to prepare index number for each of the three dimensions of human development. Sr. No Dimension Index 1 Long and healthy life dimension Life Expectancy Index 2 Knowledge dimension Education Index 3 Standard of living dimension GDP per capita Note: Education index is weighted average of adult literacy rate as well as the primary, secondary and university enrollment ratio.

Calculating Human Development Index In order to calculate the index, the following formula has been derived: Dimension Index = Actual Value - Minimum Value Maximum Value - Minimum Value For the purpose of maximum value and minimum value, the following table has been provided: Indicators Maximum Value Minimum Value Life expectancy at birth (years) 85 25 Adult literacy rate (%) 100 Combined gross enrollment (%) GDP per capita (PPP US $) 40,000 Source : Human Development Report 2005.

Life Expectancy Index + Educational Index + GDP Index Calculating Life Expectancy Index & H.D.I Eg. If the actual life expectancy in India is 66 years, then the life expectancy index will be calculated as follows: Life Expectancy Index = 66-25 / 85-25 = 41/60 = 0.68 Finally, HDI is calculated by taking an average of three dimension indices: H.D.I = Life Expectancy Index + Educational Index + GDP Index 3

Classification of countries on basis of HDI Human Development is measured by constructing Human Development Index (H.D.I). The Human Development Index (HDI) is a composite statistic of life expectancy, education, and income indices used to rank countries. According to Human Development Report, 2005, different countries are classified into 3 group of the basis of HDI in the following manner: Sr. No Group Range Example 1 High HD group 0.8 and above Norway, USA, Japan 2 Medium HD group 0.5 to 0.8 China, Sri Lanka, India 3 Low HD group Less than 0.5 Pakistan, Bangladesh

Limitations of Human Development Index Human Development is measured by constructing H.D.I. The Human Development Index (HDI) is a composite statistic of life expectancy, education, and income indices used to rank countries Limitations : 1. Many Factors are ignored 2. Problem of inequality is ignored 3. Imperfect index 4. Arbitrary use of Weights

Limitations of Human Development Index Many Factors are ignored Problem of inequality is ignored Imperfect index Arbitrary use of Weights Some critics are of view that many indicators of human development such as infant mortality, nutrition, security are totally neglected

Limitations of Human Development Index Many Factors are ignored Problem of inequality is ignored Imperfect index Arbitrary use of Weights Since HDI is an overall average, it reflects the entire economy as a whole. HDI of a country neglects the problem of inequality. It treats all people and all regions at par

Limitations of Human Development Index Many Factors are ignored Problem of inequality is ignored Imperfect index Arbitrary use of Weights Dimension Long & Healthy Life Knowledge Decent std of living Indicators Life Expectancy at birth Mean yrs of schooling expected yrs of schooling GNP per capita Dimension Index Health Index Education Index Income Index Human Development Index According to Prof. Amartya Sen, a Nobel Laureate, the HDI is an imperfect index which tries to catch complex reality of human development in one simple number

Limitations of Human Development Index Many Factors are ignored Problem of inequality is ignored Imperfect index Arbitrary use of Weights The HDI uses weighted average but it does not have any fruitful impact on measurement. The use of weights is arbitrary

Human Development Index of India India ranks 136 among 186 countries on its Human Development Index (HDI) as per the Human Development Report 2013 published by the United Nations The HDI value of India is 0.647 China has been ranked much higher than India The reason for the low ranking is obvious as India compares poorly with other countries on indicators such as life expectancy, education and per capita income

Indicators for Human Development Index of India Life Expectancy As per the Human Development Report, 2011, the life expectancy in India is 65.8 years (65.77 for males, and 67.95 year for females). When compared to European countries, it is very low. Literacy Rate The literacy rate in India in 2011 was 74.4% (82.14% for males and 65.45% for females). This is much lesser than developed nations. Also, average number of a years spent by a person in school is 10.3 years in India compared to global average of 15 years Poverty There are still 400 million people in India below the poverty line. A lot of people do not have access to clean water and proper sanitation facilities

Human Development Index of India Over 20 years since the beginning in 1990, HDI value has increased more than double i.e. from 0.301 to 0.647. We are currently in the medium HDI group and it will take us a long time to reach the high HDI group. Human Development Index Value In India (only for your reference) Year HDI Value 1990 0.301 2002 0.577 2010 0.647 Source – Human Development Index Report 2013

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