1. Life expectancy
Rank
Country
Life expectancy 1
Japan
83.4
136
India
65.4
171
Nigeria
51.9
In pairs, how can you explain the difference in these figures

2. Economic Development
What do most people think is the best measure of Economic Development?
Growth in GDP surely?
What are the problems using GDP?
Measurement problems
hidden economy, subsistence farming
currency values
Income distribution and equity
Is it the same as living standards?
political freedom
social/cultural/ environment
Crime
health

3. Any other way to measure development
In groups, if you had a blank canvas, think of up to 10 indicators you might want to use in a measure of economic development, and then narrow this down to 3. Why these?

4. Development of HDI
This is the task that was given to UN economists just over 20 years ago
The intention was to find a measure which could replace GDP growth in policymakers minds as the principal measure of Economic Development
According to Amartya Sen, development is about creating freedom for people and removing obstacles to greater freedom. Greater freedom enables people to choose their own destiny. Obstacles to freedom, and hence to development, include poverty, lack of economic opportunities, corruption, poor governance, lack of education and lack of health.
From the UN report on Human Development, Human development is the expansion of people’s freedom to live long, healthy and creative lives

5. So what is the Human Development Index
A composite measure of economic development
Combines 3 factors in equal weights:
GNI per capita (at PPP weights). This is included to represent material well being
Life expectancy at birth measures the health and longevity of the population
Education, measured by the number of years at school, to represent access to knowledge (and the potential to improve wellbeing)
Developed and used by the UN since 1990
Quoted as an index and listed in rank
Index 1 to 0.8 = very high level of HD
0.8 to 0.7 = high
0.7 to 0.55 = medium
0.55 and below = low

6. HDI vs GDP
HDI emphasises that people and their capabilities should be the ultimate criteria for assessing the development of a country
HDI can be used to question national policy choices – how can 2 countries with the same level of GNI per capita end up with different human development outcomes?

7. So you tell me the pros and cons
Country
HDI
HDI rank
GNI per capita
($000)
GNI per capita rank
Life exp
LE rank
Expected years
schooling
Expected years school rank
Japan
0.89 17
36.7 24
83.6 1
15.3 42
Kuwait
0.814 46
85.8 3
74.3 78
14.6 54
India
0.586
135
5.2
129
66.4
11.7
124
Nigeria
0.504
152
5.4
125
52.5
177
9.0
166

8. Pros
It has fulfilled a basic mission of moving the debate on from GDP growth, which does not measure human development, adding key factors
The HDI can be used to question national policy choices
Quite easy to collect the data
New factors are predictive of economic growth? Does education shift the AS curve?
A single figure. Simple to understand, and easy to use in modelling

9. Cons
The HDI notably fails to take account of qualitative factors, such as cultural identity and political freedoms (human security, gender opportunities and human rights for example).
The GNI per capita figure – and consequently the HDI figure – takes no account of income distribution
But latest reports do have an index adjusted for inequality
It does not take into account Carbon (global warming) – though most of the 2011 UN report talks to this

10. Conclusion
The United Nations HDI is intended to allow economists to draw broad conclusions about which countries enjoy relatively high standards of living, and which are, by comparison, under-developed.
Whilst the HDI index has faults – there could always be more factors included – it has fulfilled a basic mission of moving the debate on from GDP growth
It allows for questioning of government policies
There is now an iHDI, which adjusts for inequality
Note UN has all sorts of other measures as well – lots of good reading material available