What Is Human Development Index (HDI)?
The Human Development Index shows average performance in three important areas of human development: living a long and healthy life, having access to education, and having an acceptable standard of living. It is a statistical method for assessing a nation’s overall success in terms of its social and economic components.
You are free to use this image on you website, templates, etc., Please provide us with an attribution linkHow to Provide Attribution?Article Link to be Hyperlinked
For eg:
Source: Human Development Index (wallstreetmojo.com)
HDI is one of the greatest instruments for monitoring a nation’s level of progress, as it can incorporate key social and economic factors that influence economic growth. Moreover, it works with the notion that the most important factor in determining a nation’s level of development should be its citizens and their capabilities.
Table of Contents
- What Is Human Development Index (HDI)?
- Human Development Index Explained
- Indicators
- Formula
- Examples
- Importance
- Limitations
- HDI vs GDP vs Human capital index
- Frequently Asked Questions (FAQs)
- Recommended Articles
Key Takeaways
- The Human Development Index shows a country’s average performance in three important areas of human development:
- Living a long and healthy life
- Having access to education
- Having an acceptable standard of living
- The HDI highlight that instead of relying solely on economic growth to gauge a nation’s development, consideration should be given to its citizens and their potential.
- HDI is one of the greatest instruments for monitoring a nation’s level of progress, as it can incorporate key social and economic factors that influence economic growth despite its limitations.
Human Development Index Explained
A Human Development Index is astatistical methodthat shows how countries have fared in the areas of human development, namely, living a long and healthy life, having access to education, and having an acceptable standard of living. The normalized indices for each development dimension are averaged to get the HDI. Each year, the UNDP ranks the nations based on the HDI report. Given that it incorporates significant social and economic factors that influence economic growth, the HDI is one of the greatest tools for monitoring a nation’s level of progress.
In 1990, the United Nations Development Programme (UNDP) published its first Human Development Report (HDR). The Pakistani Economist Mahbub Ul Haq and the Indian Nobel laureate Amartya Sen introduced the first HDR in 1990. ThePakistani economist, Mahbub ul Haq’s approach to human development was grounded in Amartya Sen’s research on human capabilities.
The HDI calculates a minimum and maximum value for each dimension referred to as “goalposts” and then displays where each nation sits regarding these goals. The value of the index is calculated for each dimension on a scale from 0 to 1, with 0 denoting the least value and 1 denoting the highest value allocated to the associated indicator. A country’s HDI value increases with its level of human development.
HDI Indicators
Three indicators of HDI:
- Life expectancy at birth:long and healthy life is determined through the life expectancy index. For example, when the life expectancy at birth is 85 years, the LEI is 1, and when it is 20 years, it is 0.
- Expected years of schooling & Mean years of schooling: It comes under the knowledge dimension of the HDI index. Acquired knowledge through mean and predicted years of education is measured through the education index. The two Knowledge indicator values are first normalized using a minimum value of 0 and a maximum value of 15 for the mean years spent in school and 18 for the expected number of years.
- GNI per capita (PPP $): The technique measures a decent standard of living through the GNI index. The low minimum value of PPP is taken as $100. PPP $75,000 is the maximum value allowed.
A good performance on the UN Human Development Index would necessitate a good performance on all dimensions since a poor performance on any index would be instantly reflected in the entire HDI. (Values mentioned are according to the 2014 goal post).
HDI Formula
The Human Development Index calculation involves multiple steps and formulas. It starts with calculating the index values: Life Expectancy Index (LEI), Education Index (EI), and Income Index (II). Finally, HDI is the geometric mean of the three normalized indices.
Examples
Let’s look into some of the examples of the Human Development Index:
Example #1
Suppose the life given below are the values of county “ABC” expectancy at birth is 75 years, mean years of schooling is 10 years, expected years of schooling is 15, and GNI per capita (PPP US$) is 17,000.
HDI calculation will be done through two major steps, as shown in the image below:
Example #2
Given below is the data of the United States regarding itsperformancein the Human Development Index ranking:
The United State’s Human Development Index ranking is 17 out of 189 nations and territories in terms of HDI value for 2019, with a value of 0.926, placing it in the very high human development category. The HDI score in the United States increased by 7.1 percent, from 0.865 to 0.926, between 1990 and 2019. At the same time, the 2019 HDI of 0.926 of the United States is higher than the average of 0.898 belonging to nations in the very high human development group and higher than the average of 0.900 for nations in the OECD.
From the above data, it is clear that a country like the US has high development ranking and indicates that the population residing has better living standards and choices than the rest of the low-ranking countries.
Importance
The HDI is used to draw the attention of policymakers, the media, and nongovernmental organizations and to shift the focus from the usual standard economic statistics that determine human development outcomes. It was developed to give importance to the most critical factor in determining a nation’s level of development—its citizens and their capacities—rather than economic growth.
The HDI is also used to examine national policy decisions and see how two nations with similar per capita income can have such varied levels of human development. For example, the HDI of one country may be significantly higher than that of the other even if two nations have similar income structure due to their vastly different life expectancies and literacy rates. The studies are done to understand why such disparities exist in the first place and do what is possible to bridge the gap. An analysis of why certain methods are successful in some countries but not others are needed for the same reason.
These conclusions help organize specialized health and educational policies by the respective governments. The HDI also draws attention to variations across nations, provinces, states, genders, ethnicities, and other socioeconomic categories. It further helps draw the required focus on the existing internal disparities.
Limitations
The HDI captures only a part of human development. Other factors, such as inequalities, empowerment, poverty, and human security, are equally vital for measuring the overall growth prospects of a population. However, there are separate indices by UN Human Development Report Office (HDRO) that measure key issues such as income inequality, poverty, and gender disparity that do not fall under the HDI. Data from these indices are needed to form a complete picture of a nation’s actual level of human development and quality of life.
The factors mentioned above, like gender disparity, poverty, inequalities, and human security, significantly impact their economic opportunities, affecting health, living, and education. The index also disregards technological development’s contribution to civilization. Furthermore, when large amounts of data are gathered across countries, there can be a large sampling error. Errors can render the whole data useless.
HDI vs GDP vs Human Capital Index
Let us look at the major differences between HDI, GDP, and HCI:
| Particulars | HDI | GDP | Human Capital Index |
|---|---|---|---|
| Reporting Body | United Nations Development Programme (UNDP)’s HDRO (Human Development Report Office) publishes HDI. | Respective countries publish GDP. | The World Bank publishes the Human Capital Index. |
| Purpose | The Human Development Index (HDI) is a statistical composite index combining per capita income, education, and life expectancy indicators. | Gross domestic product (GDP) is a monetary indicator of the market worth of all finished products produced by nations over a certain period. | The index evaluates which nations best mobilize their citizens’ economic and professional potential. In addition, the Index calculates the amount of money lost by each nation due to poor health and education. |
Frequently Asked Questions (FAQs)
What are the components of the Human Development Index?
The HDI dimensions are long and healthy life, knowledge, and standard of living. The dimension indexes for a long and healthy life, knowledge, and standard of living are life expectancy, education, and GNI, respectively.
What does the Human Development Index measure?
A country’s average progress in the three fundamental areas of human development—health, knowledge, and standard of living—is measured by the HDI. Since the measurement of the Human Development Index is based on many factors, it is referred to as a composite summary index.
Who invented the Human Development Index?
HDI is a measure of human development. Pakistani economist Mahbub ul Haq developed the Human Development Index based on the study of human potential conducted by Indian economist Amartya Sen. the Index was developed to emphasize that citizen well-being and capabilities also play a major role in the development of a country.
Recommended Articles
This article has been a guide to what is Human Development Index. We explain its indicators, formula, examples, importance, limitations, and comparison with GDP. You may also find some useful articles here –
- Human Capital
- Economic Stability
- Developing Economy
FAQs
What is the Human Development Index? ›
The HDI is a summary composite measure of a country's average achievements in three basic aspects of human development: health, knowledge and standard of living.
What are the 4 indicators of HDI? ›The Human Development Index (HDI) measures each country's social and economic development by focusing on the following four factors: mean years of schooling, expected years of schooling, life expectancy at birth, and gross national income (GNI) per capita.
What is 2022 Human Development Index? ›According to the Human Development Report 2021-22, India's rank on the Human Development Index (HDI) has slipped from 130 in 2020 to 132 in 2022, in line with a global fall in HDI scores in the wake of the Covid-19 pandemic.
What are the top 5 HDI countries? ›Norway, Australia, Switzerland and Germany lead the Human Development Index (HDI) rankings in 2016, eight European countries are in the top 10, followed by the two wealthy countries of North America, Canada and the US, and inbetween the only Asian country, Singapore.
Who has the highest HDI in the world? ›Countries with the highest Human Development Index value 2021. Switzerland had the highest level of the Human Development Index (HDI) worldwide in 2021 with a value of 0.962.
What does a high HDI mean? ›Human development index (HDI) is a measure of the standard of living of a citizen: having a higher HDI means higher standard of living therefore higher good consumption and more waste generation.
What country has the lowest HDI? ›Human Development Index (0 - 1), 2021 - Country rankings:
The average for 2021 based on 184 countries was 0.723 points. The highest value was in Switzerland: 0.962 points and the lowest value was in South Africa: 0.385 points.
They provide a richer picture of progress than gross domestic product (GDP), which relates to a country's wealth, or even GDP per capita, which tells us something about an individual's means but nothing about their life outcomes.
What does the HDI not measure? ›The HDI simplifies and captures only part of what human development entails. It does not reflect on inequalities, poverty, human security, empowerment, etc. The HDRO provides other composite indices as broader proxy on some of the key issues of human development, inequality, gender disparity and poverty.
Which country has lowest HDI in 2022? ›- Niger — .400.
- Central African Republic — .404.
- Burundi — .426.
- Mali — .428.
- Mozambique — .446.
- Burkina Faso — .449.
- Yemen — .455.
- Guinea — .465.
What country has the highest HDI 2022? ›
Countries with the highest HDI scores
Switzerland (0.962) Norway (0.961) Iceland (0.959) Hong Kong (0.952)
Norway topped the list with a score of 0.957, with Australia and Switzerland in the succeeding ranks.
What is the HDI of Mexico? ›Human Development Index (0 - 1)
The average value for Mexico during that period was 0.718 points with a minimum of 0.595 points in 1980 and a maximum of 0.779 points in 2020. The latest value from 2021 is 0.758 points. For comparison, the world average in 2021 based on 186 countries is 0.721 points.
...
2013 rankings.
| Rank | Country | Score (out of 10) |
|---|---|---|
| 1 | Switzerland | 8.22 |
| 2 | Australia | 8.12 |
| 3 | Norway | 8.09 |
| 4 | Sweden | 8.02 |
GDP is considered a means to human development, but not an end. GNI per capita, which is essentially the average person's purchasing power, is an important factor in calculating Human Development Index, but just one of several. The Human Development Index paints a more holistic picture of a country than GDP.
Does the US have the highest HDI? ›...
List of U.S. states and territories by Human Development Index.
| Rank | State, federal district, or territory | HDI (2021) |
|---|---|---|
| 1 | Massachusetts | 0.949 |
| 2 | Connecticut | 0.948 |
| 3 | Minnesota | 0.947 |
| 4 | New Hampshire | 0.943 |
One of the reasons why Norway is ranked so high is due to the country's investment in its citizens living long and healthy lives. This investment results in a high life expectancy, which is 82.3 years. This is especially impressive when comparing this statistic to the worldwide average life expectancy of 71.5 years.
What are the top 3 HDI countries? ›| HDI rank | Country | HDI Value 2021 |
|---|---|---|
| 1 | Switzerland | 0.962 |
| 2 | Norway | 0.961 |
| 3 | Iceland | 0.959 |
| 4 | Hong Kong, China (SAR) | 0.952 |
The Human Development Index (HDI) provides a single index measure to capture three key dimensions of human development: a long and healthy life, access to knowledge and a decent standard of living. The HDI utilizes four key metrics: life expectancy at birth – to assess a long and healthy life.
Is a low HDI score good? ›Source: UNDP – Human development reports: Human Development Index (HDI). The minimum and maximum values for the HDI range between 0 and 1, therefore the higher the HDI value, the higher the level of a country's human development.
Why is HDI a good indicator? ›
Advantages of using the HDI
HDI uses 2 types of social data (health and education) and 1 type of economic data which means that the measure uses a broad range of information and is not tied up with only one measure. This is a much more accurate measure of both the standard of living AND quality of life in a country.
Description: Pakistani economist Mahbub ul Haq created HDI in 1990 which was further used to measure the country's development by the United Nations Development Program (UNDP).
Does Japan have a low HDI? ›Japan is the second-best place in the world in terms of human development, with Hong Kong in first place and Iceland in third, according to a new index called the Human Life Indicator that is supposed to be simpler and more accurate than the U.N. Human Development Index.
What country is 1 on HDI? ›According to Human Development Report 2020, Norway ranks first in Human Development Index with HDI value of 0.957. It is followed by Ireland, Switzerland and Hongkong. India's position is 131 with HDI value of 0.645.
Which country has high GDP but low HDI? ›Equatorial Guinea – High Income but Low Human Development (2017) – ReviseSociology.
What is the disadvantage of HDI? ›Limitations of Human Development Index
HDI reflects long-term changes (e.g. life expectancy) and may not respond to recent short-term changes. Higher national wealth does not indicate welfare. GNI may not necessarily increase economic welfare; it depends on how it is spent.
A significantly positive relationship between HDI and economic growth can be found in the cases of both developed and developing economies. Life expectancy and primary gross enrollment ratio used as measures of health and education, respectively, impact economic growth negatively.
Can HDI measure poverty? ›The United Nations Development Programme's (UNDP) annual Human Development Report (HDR) and its Human Development Index (HDI) provide an important yardstick in measuring global poverty by looking at poverty beyond just income.
Does HDI measure inequality? ›The IHDI accounts for inequalities in HDI dimensions by “discounting” each dimension's average value according to its level of inequality. The IHDI value equals the HDI value when there is no inequality across people but falls below the HDI value as inequality rises.
How does HDI measure standard of living? ›human well-being included in the HDI, the following variables were chosen – life expectancy at birth for a long and lengthy life, educational attainment in terms of adult literacy rate and combined gross enrollment ratio at primary, secondary and tertiary level and GDP per capita (PPP$) for a decent standard of living.
Which North American country has lowest HDI? ›
Human Development Index (0 - 1), 2021 - Country rankings:
The average for 2021 based on 20 countries was 0.749 points. The highest value was in Canada: 0.936 points and the lowest value was in Haiti: 0.535 points.
- United States: $20.89 trillion.
- China: $14.72 trillion.
- Japan: $5.06 trillion.
- Germany: $3.85 trillion.
- United Kingdom: $2.67 trillion.
- India: $2.66 trillion.
- France: $2.63 trillion.
- Italy: $1.89 trillion.
Switzerland has ranked first in the United Nations Development Programme (UNDP) Human Development Index in 2021, mainly due to a rise in life expectancy and a rebound of its income per capita, following the end of all Covid-19 restrictions in the country.
Who prepares HDI rank? ›What is the HDI rank of India in 2021? Ans. Human Development Report 2020: Out of 191 countries, India has ranked 132 on the Human Development Index 2021 prepared by the United Nations Development Programme (UNDP).
What rank is Egypt on HDI? ›| Rank | Governorate | HDI (2021) |
|---|---|---|
| High human development | ||
| – | Egypt | 0.731 |
| 14 | Sharqia | 0.730 |
| Medium human development | ||
| Date | HDI |
|---|---|
| 2016 | 0.713 |
| 2017 | 0.721 |
| 2018 | 0.729 |
| 2019 | 0.735 |
Source: UNDP. Vietnam's HDI value is 0.703 in 2021, basically unchanged from 2019 (0.704). Vietnam's HDI value in 2021 ranks 6th in Southeast Asia. Besides, Vietnam's HDI has increased two places in the global ranking from 117/189 countries in 2019 to 115/191 countries in 2021.
Which US country is best to live? ›- Sweden. #1 in Quality of Life. #5 in Best Countries Overall. ...
- Denmark. #2 in Quality of Life. #10 in Best Countries Overall. ...
- Canada. #3 in Quality of Life. ...
- Switzerland. #4 in Quality of Life. ...
- Norway. #5 in Quality of Life. ...
- Finland. #6 in Quality of Life. ...
- Germany. #7 in Quality of Life. ...
- Netherlands. #8 in Quality of Life.
Switzerland Is No. 1 in 2022 U.S. News Best Countries Rankings.
What is the most free country? ›| Rank | Country | Overall |
|---|---|---|
| 1 | Singapore | 80.6 |
| 2 | Switzerland | 80.1 |
| 3 | Ireland | 80.0 |
| 4 | New Zealand |
Is HDI a good measure of economic growth? ›
HDI values are often influential in conjunction with gross domestic product (GDP) and can affect a nation's fiscal and public policy. However, some critics argue that these measures are flawed and do not create an accurate picture of prosperity.
Does HDI measure wealth? ›Human Development Index (HDI) - Key takeaways
The Human Development Index measures health, wealth, and education to analyze a country's development.
HDI gives a more accurate picture of a country's situation than GNI. Countries with high GNI, such as oil rich Gulf states might not necessarily have high HDI scores, due to inequalities within these countries. The map below shows countries by gross national income.
Why is HDI a good index? ›Advantages of using the HDI
HDI uses 2 types of social data (health and education) and 1 type of economic data which means that the measure uses a broad range of information and is not tied up with only one measure. This is a much more accurate measure of both the standard of living AND quality of life in a country.
Human Development Index (0 - 1), 2021 - Country rankings:
The average for 2021 based on 184 countries was 0.723 points. The highest value was in Switzerland: 0.962 points and the lowest value was in South Africa: 0.385 points. The indicator is available from 1980 to 2021.