1. The Human Development Indices
Oxford, Sep
Claes Johansson
United Nations Development Programme
Human Development Report Office

2. The Human Development Indices
The HDI (Human Development Index)
- a summary measure of human development
The GDI (Gender-related Development Index)
- the HDI adjusted for gender inequality
The GEM (Gender Empowerment Measure)
- Measures gender equality in economic and political participation and decision making
The HPI (Human Poverty Index)
- Captures the level of human poverty

3. The dimensions and indicators of the HDI
HDI has three dimensions, measured by one or two indicators each:
Leading a long and healthy life
Life expectancy at birth
Education
Adult literacy rate
Gross primary, secondary and tertiary enrolment
A decent standard of living
GDP per capita (PPP US$)

4. What dimensions to include
The concept of human development has many dimensions
Health, education and standard of living are dimensions that are basic and can be measured
Proposed additions either are hard to measure or overlap with existing dimensions - Examples: political freedom, environment, child mortality
HD can never be captured in single indicator!

5. Combining indicators for the HDI
In order to create the HDI, ‘goalposts’ are chosen for each indicator
Using goalposts rather than observed minima and maxima allows comparisons over time
Set with the timeframe
Also set to allow for disaggregation – some subgroups can have lower values than observed in country data

6. Goalposts for calculating the HDI
Indicator
Minimum value
Maximum value
Life expectancy
25 years
85 years
Adult literacy 0%
100%
Gross enrolment
GDP per capita
100 (PPP US$)
40,000 (PPP US$)

7. The HDI Calculating the HDI Dimensions: Indicators: Dimension index
A long and
healthy life
Life
Expectancy
Index
Being
Knowledgeable
Literacy &
Enrolment
Education
Index
A decent
standard
of living
GDP
per capita
Index
The HDI

8. Calculating the HDI: an example (Zambia)
Life expectancy index
Education index
Income index
HDI
Literacy (2/3)
Enrolment (1/3)
100%
100% 1
85 years 1
40,000 1 1
78.1
0.68 49
0.433
780
0.34
41.4
0.27 0% 0%
100
25 years
(log scale)
= 0.433 3

9. The weights in the HDI
The three dimensions in the HDI – health, education, standard of living – weighted equally
Equal weighting is not an accident; reflects a belief that all three are equally important
Assumption of substitutability – central, but sometimes forgotten
Changing the weighting, even drastically, maintain

10. Changing weights – what would happen?
How sensitive is the HDI to changing weights?
Not very: for the full set of countries, the components are highly correlated
Does not implicate redundancy: in sub-groups, large differences in how income is translated into other dimensions
Life expectancy
Education
GDP -
0.74
0.78
0.75

11. Average absolute rank change with changing weights

12. Correlation with the HDI with increasing weights by subcomponent

13. Why include GDP per capita?
GDP per capita included as a proxy for a decent standard of living
Reflects a number of issues not explicitly included: the expanding choices available in many areas with increasing income
Logarithm of GDP is used – reflects diminishing return in expanding choices

14. Are these all the dimensions of HD?
Critiques of the HDI
Critiques
Are these all the dimensions of HD?
Are these indicators good measures of the dimensions?
What about inequality?
Can it capture policy changes?
Ranking countries – unknown uncertainties
Why cap values?
Why have an index at all?

15. Critiques, cont. ‘Missing’ components
What about future generations – an environmental degradation component?
Political freedoms and rights?
Culture
Nutritional status
Uncertainty
Personal security

16. Critiques incorporated in the HDI
Critiques that have been incorporated
Absolute maximum and minimum values for each indicator
Supplementing literacy with a second education indicator
Changing the adjustment of GDP per capita

17. Political freedom Political freedom index (PFI) presented in HDR 1991
Meant to be incorporated in the HDI
Caused technical and political controversy
Ultimately dropped because of the difficulties of measurement

18. Key data problems Literacy Conceptually and practically limited
Definition and collection of literacy varies widely from country to country
Culturally specific: script systems and other factors vary across the world
UNESCO Institute of Statistics LAMP programme

19. GDP per capita (PPP US$)
Key data problems, cont.
GDP per capita (PPP US$)
Based on the ICP programme, limited to some 60 countries
Based on regressions for other countries
Imperfect measure but certainly better than exchange rate terms
Life expectancy
Should measure “long and healthy life” but does not take into account health, just length

20. Staying power of the HDI
Why has the HDI been successful?
HDI has become one of the best known and most used indicators of development.
Despite some remaining controversies, broadly accepted and used by media, policymakers and academics
What factors likely contributed?
When the HDI was first launched in 1990, it was something of a ‘trial balloon’. Convinced by the need for such an index, the authors were nonetheless fully conscious that it could be rejected and further publication stopped in the face of either methodological or political objections. Over the last decade, the HDI has in fact weathered the storms of controversy reasonably well and has become well established and accepted. While controversies remain, there are few voices that would argue for abandoning it. And in fact, of the multiple efforts to develop composite indices of national progress that focus on non-economic dimensions, the HDI is not only one of the most well known and used, but the only one that is published by an inter-governmental organisation. While it has received the attention and therefore the scrutiny of the world, it has survived.

21. Staying power of the HDI
Policy relevance, and acceptability
Underpinned by four aspects:
Conceptual clarity that facilitates its power as a tool of communication
Reasonable level of aggregation
Use of universal criteria and variables
Use of standardized international data explicitly designed for comparison
In our view, the HDI owes its survival not only to a sound methodology, but also to two other factors: policy relevance and acceptability. First, policy makers have indeed found it useful and therefore they have wanted to see it continue. Second, they have also accepted it, even if they have not always liked the results. In fact, those who have theoretical objections to composite indices often accept the HDI on the grounds that it has had a positive policy impact and is being used. (see for example Handoussa in Journal of Human Development).
Four aspects of the HDI have been critical to ensuring policy relevance and acceptability:
conceptual clarity that facilitates its power as a tool of communication;
a reasonable level of aggregation;
use of universal criteria amenable to inter-country comparisons;
use of standardized international data which have been legitimized through official processes.

22. Specification of the HDI derived from a clearly defined concept:
Conceptual clarity
Specification of the HDI derived from a clearly defined concept:
Dimensions and variables correspond to the concepts of human development
Meaning of variables intuitively understandable
Conceptual clarity for the user: avoid the black box approach In developing composite indices, the first step is to define what is to be measured in terms that can be understood easily by the average user. The specification of the HDI was derived from a clearly defined concept, not the other way round. This logic may seem obvious but it is often not the case when efforts to develop indices of governance, corruption or environmental sustainability are made without the foundation of a clear conceptual framework.
The strength of the HDI as a tool of communication also lies in its clarity to the average reader who can easily identify with the notion that the three components of the HDI – being knowledgeable, leading a long and healthy life and having a decent standard of living – do represent fundamental goals of human well-being.
Thus it is easy for policy makers around the world to quickly and intuitively grasp the idea that HDI is measuring aspects of well-being not captured in GDP but that are important goals for any society. A low score in the HDI is indeed a cause of concern and a high score would be a source of pride and few would dispute that concern or pride. In contrast, many other composite indices are ‘black boxes’ with complex conceptual frameworks and methodologies. To compound the ‘black box’ effect, there is a lack of transparency in the publication of tables without full technical explanation of how the index is calculated or what the data sources are. [1]
[1] The Davos environmental sustainability index is an example in which the method of calculation and the data sources used are not fully published along with the tables.

23. Reasonable level of aggregation
HDI focuses on a set of universally -applicable core issues
Aggregating too many issues tends to compromise analytical usefulness and policy relevance
Separate indices for e.g. gender empowerment, human poverty

24. Universally-relevant concepts and variables
High degree of consensus that more is better in each of the variables
In contrast with e.g. election frequency, voter turnout, share of largest party
Use of universally-relevant criteria that permit inter-country comparison The HDI is based on dimensions that are clearly comparable across countries, with indicators that are universally relevant. Composite indices that rank countries are necessarily judgmental: they are evaluative, not just descriptive, measures in which more is definitely better than less. There is a high degree of consensus across the world on the indicators being used as important development objectives, namely health, education and incomes. Contrast this to more context specific indicators - such as area under woodland, often used in environmental sustainability measures, or frequency of elections, often used in governance measures – for which more is not necessarily better.

25. Uses data that are legitimized through the international statistical system
Of course, still data problems but data have been standardized to ensure inter-country comparability
Use of legitimized data Data availability is a problem that affects all measurement challenges in all sectors. In fact, many countries lack data on key social or economic issues such as employment on which only xx countries have data in the ILO statistics. Much of what we would want to monitor quantitatively has not been measured. A good number of issues of concern[1] such as political freedom have not been measured at all.
Data used in the HDI are limited to international statistical series that have been published by inter-governmental organizations and originate in official national statistics. Almost all countries have data on literacy, school enrolment, life expectancy and per capita income. There are still data problems: Purchasing power parity estimates could be based on more recent and comprehensive surveys and for measuring knowledge net enrolment or mean years of schooling would be preferable. As with all statistical series, the cross-country quality does vary. But the HDI is able to use data that have near universal coverage, and have also been through a review process – i.e. data that have been produced and published after a legitimization process, including an assessment of their inter-country comparability.
Often, attempts at developing composite indices do not use such legitimized dataand many use estimates to fill gaps in data coverage. Not only does this lead to indices that use unreliable data of poor quality, but also to data that have no credibility or legitimacy. Most indices of governance – such as corruption and political freedom – have particular problems of legitimacy because they use indicators of subjective perceptions.
However accurate the data used and however sound the methodology, an index can not be considered legitimate when the underlying data have not themselves been through the legitimization process.
[1] A notable example is the index of health systems published by the WHO in This index used data that were not officially published, were often estimated, and included indicators that were qualitative assessments.

26. Appropriate uses of the HDI
Ordinal vs. cardinal – HDI value has a meaning but it is not intuitive and should be used carefully
Ranking
Example: reversals in HDI? Arguably meaningful exercise, if weights are accepted

27. The Human Poverty Indices (HPI-1 and HPI-2)
Other indices
The Human Poverty Indices (HPI-1 and HPI-2)
Whereas HDI measures average achievement, the HPI measures deprivations
Separate indices for developing countries (HPI-1) and high-income OECD countries (HPI-2)

28. The deprivational perspective
Other indices
The deprivational perspective
HDI and GDI focus on national averages (conglomerative aspect)
HPI focuses on the worst off (deprivational aspect)

29. Other indices
Why separate indices
Distinguishing between developing and OECD countries recognized the relative nature of poverty
Allows the use of richer, more appropriate data
Different deprivations are more relevant in different contexts

30. The Human Poverty Index for developing countries (HPI-1)
Other indices
The Human Poverty Index for developing countries (HPI-1)
Dimensions:
Indicators:
A long and healthy
life
Probability at birth of not
surviving until age 40
Knowledge
Adult illiteracy rate
A decent standard
Access to safe water and
children underweight for age

31. The Human Poverty Index (HPI-1)
Other indices
The Human Poverty Index (HPI-1)
Where:
P1=Probability of not surviving to age 40 (times 100)
P2=Adult illiteracy rate
P3= Average of people without access to safe water and children underweight
For decent standard of living unweighted average is used
All are already percentages – or can easily be made percentages.
As  rises greater weight is given to the dimension in which there is most deprivation. =1 implies simple average (perfect substitutability), =∞ tsets HPI = highest value (no substitutability). In he global HDR =3, giving additional but not overwhelming weight to areas of most acute deprivation

32.  in the HPI formula
As  rises greater weight is given to the dimension in which there is most deprivation.
=1 implies simple average (perfect substitutability),
=∞ HPI = highest value (no substitutability).
In the global HDR =3, giving additional but not overwhelming weight to areas of most acute deprivation

33. The Human Poverty Index for OECD countries (HPI-2)
Other indices
The Human Poverty Index for OECD countries (HPI-2)
Dimensions:
Indicators:
A long and healthy
life
Probability at birth of not
surviving until age 60
Knowledge
Functional illiteracy rate
A decent standard
Social exclusion
Relative income poverty
Long-term unemployment

34. The Human Poverty Index (HPI-2)
Other indices
The Human Poverty Index (HPI-2)
Where:
P1=Probability of not surviving to age 60 (times 100)
P2=Functional illiteracy rate
P3=Relative income poverty (population below 50% median income) P4 = Long-term unemployment
For decent standard of living unweighted average is used
All are already percentages – or can easily be made percentages.
As  rises greater weight is given to the dimension in which there is most deprivation. In the global HDR =3, giving additional but not overwhelming weight to areas of most acute deprivation

35. The Gender-related development Index (GDI)
Other indices
The Gender-related development Index (GDI)
Same components as the HDI
After calculating dimension index for each sex – they are combined in a way to penalize gender equality (equally distributed index)
The GDI is calculated by taking the unweighted average of the three equally distributed indices

36. The Gender-related development Index (GDI)
Other indices
The Gender-related development Index (GDI)
Formula for the equally distributed index:
Population shares just to take the weighted average – about levels not about inequality penalisation.
determines the size of gender equality in a society. In the global HDR it is set at 2.

37. Goalposts for calculating the GDI
Other indices
Goalposts for calculating the GDI
Maximum
Value
Minimum
value
Indicator
Life expectancy
Female years years
Male years years
Adult literacy % %
Gross enrolment % %
GDP per capita $40,000(US) $100(US)

38. The Gender Empowerment Measure
Other indices
The Gender Empowerment Measure
While GDI shows women’s capabilities – GEM shows womens opportunities in economic and political life

39. The Gender Empowerment Measure
Other indices
The Gender Empowerment Measure
Calculate dimension index and equally distributed equivalent percentage (EDEP) for each dimension (like GDI)
For political and economic decision making divide EDEP by 50 (the ideal share women should have)
N.B. For political and economic decision making EDEP can be calculated directly (as indicators are already %)
NB. Only have to do the dimension index for income as the others are already scaled.

40. The Gender Empowerment Measure
Other indices
The Gender Empowerment Measure
Income is not logged in the calculation of the income index.
Again = 2, for moderate penalisation of inequality
Why is income not scaled: In GDI it represents contribution to basic human development – here it represents economic power – which does not follow a logarithmic course.

41. Discrimination through the lens of the HDI
Life
expectancy
Literacy
Income