Origin of HDI: The index was developed in 1990 by Pakistani economist Mahbub ul Haq and Sir Richard Jolly, with help from Gustav Ranis of Yale University and Lord Meghnad Desai of the London School of EconomicsPakistaniMahbub ul HaqYale UniversityMeghnad DesaiLondon School of Economics
Dimensions of HDI Life expectancy at birth, as an index of population health and longevityLife expectancy Knowledge and education, as measured by the adult literacy rate (with two-thirds weighting) and the combined primary, secondary, and tertiary gross enrollment ratio (with one-third weighting) literacygross enrollment ratio Standard of living, as measured by the natural logarithm of gross domestic product (GDP) per capita at purchasing power parity (PPP) in United States dollars.Standard of livingnatural logarithmgross domestic productpurchasing power parityUnited States dollars
Calculation of HDI To construct the index, fixed minimum and maximum values have been established for each of these indicators: Life expectancy at birth: 25 years and 85 years Adult literacy rate: 0 & 100 % Combined gross enrolment ratio: 0% & 100 % Real GDP per capita (PPP$): $100 & $40,000 (PPP$)
Calculation of HDI Individual indices can be computed according to the general formula: Index = Actual x i value – minimum x i value/ Maximum x i value – minimum x i value For eg: the life expectancy at birth in a country is 63.7 years the index of life expectancy for the country would be: Life expectancy index = 63.7-25/85-25 = 40/60 = 0.645
Calculation of HDI The adult literacy rate is 61.0%. Adult literacy index =61.0-0/100-0=0.61 Combined gross enrolment ratio is 63.8% Combined gross enrolment index =63.8-0/100-0=0.638 Education index=2/3(0.61)+1/3(0.638)=0.62 Real GDP is 3452,then adjusted GDP =log(3452)-log(100)/log(40000)-log(100)=0.591 Therefore HDI = (0.645+0.62+0.591)/3 =0.619
Categories of HDI: Very High Human Development Index – HDI 0.900 to 1.0 High Human Development Index – HDI 0.800 to 0.900 Medium Human Development Index – HDI 0.500 to 0.799 Low Human Development Index – HDI below 0.500
Relationship between individual development and human development in general If two people in a relatively unequal society have an HDI of 0.5 and 0.25, respectively, and both increase their level of development by 0.25, they will affect general development in the same magnitude. In a more equal society, however, an increase in the HDI of the poorer person should count more.
Limitations of HDI: Not a comprehensive measure of human development. It only focuses on three dimensions of capabilities. The HDI is not designed to assess progress in human development over a short-term period because two of its component indicators—adult literacy and life expectancy at birth—are not responsive to short-term policy changes. Like any average country measure, the HDI does not account for variations in human development within the country. Countries with the same HDI may be very different in how human development is distributed, either from region to region, or from social group to social group.