European Review of Economic History, , .

Printed in the United Kingdom Cambridge University Press

The Human Development Index,

: Some revised estimates
NICHOLAS CRAFTS
Department of Economic History, London School of Economics, Houghton
Street, London WCA AE, UK

This article presents revised estimates for the Human Development Index
(HDI) for the benchmark years , , , and , based on
the latest available data for real gross domestic product per person and on
the recently modified formula for HDI. The results indicate that HDI in
most of todays less-developed countries exceeds that of Western Europe in
and that the gaps in HDI between Western Europe and each of Africa,
China and India were smaller in than in . Both these outcomes
have been heavily influenced by widespread gains in life expectancy.

. Introduction
In recent years economic historians have made considerable use of the
Human Development Index (HDI) as an index of historical living standards
(Costa and Steckel , Crafts b, Floud and Harris ). Recently,
the formula used for HDI in the annual Human Development Report has
been modified. This article incorporates the new formula into the estimates
of HDI over the long run previously presented in Crafts (a) and Crafts
() and notes the implications of this change for historical comparisons.

. Revised estimates of HDI

As is well-known, HDI has three basic components, education (E), income
(I) and longevity (L). They are combined in a single index by measuring
them in terms of the percentage of the distance travelled between an
assumed minimum and maximum value in each case. The formula used in
UNDP () is as follows:
HDI
(E  I  L)/
where
E
.LIT  .ENROL
I
(log y  log )/(log ,  log )
L
(e  )/(  )
 European Review of Economic History

where LIT is the adult literacy rate, ENROL is the percentage of the rel-
evant age group enrolled in primary, secondary and tertiary education, y is
GDP per person in PPP$ and e is years of life expectancy at birth.
Each of E, I and L has a value between and as does HDI. Values of HDI
below . (above .) are described as low (high) development.
This formula is used for the HDI estimates in this article. It differs from
that previously used by UNDP only with regard to the income variable (I).
This had been based on actual income up to a threshold level, after which
further income was increasingly heavily discounted. Broadly speaking, the
effect of the revision to the formula is to raise HDI scores at very low levels
of income and to lower them thereafter while allowing additional income in
rich countries to add a bit more to HDI.
Tables to update the estimates for HDI in Crafts (a, ). The
same data are used for E and L so the revisions only concern the income

Table . HDI in .

Australia . France .
Switzerland . Germany .
Denmark . Norway .
USA . Austria .
UK . Spain .
Canada . Italy .
Netherlands . Japan .
Sweden . Finland .
Belgium .

Sources: Crafts (a) updated using Maddison () and UNDP (), see text.

Table . HDI in .

New Zealand . Uruguay .

Australia . Argentina .
Denmark . Hungary .
Netherlands . Austria .
Canada . Italy .
UK . Japan .
Switzerland . Finland .
USA . Spain .
Sweden . Bulgaria .
Norway . Chile .
Germany . Russia .
France . Colombia .
Ireland . Mexico .
Belgium . Brazil .
Czech Republic . India .

Sources: Crafts (a) updated using Maddison () and UNDP (), see text.
 The Human Development Index , revised

Table . HDI in , and .

New Zealand . . .
USA . . .
Netherlands . . .
Switzerland . . .
Denmark . . .
Australia . . .
Sweden . . .
Norway . . .
Canada . . .
UK . . .
Belgium . . .
Germany . .na .
Ireland . . .
France . . .
Czech Republic . .na .
Austria . . .
Finland . . .
Hungary . . .
Russia . .na .
Uruguay . . .
Japan . . .
Italy . . .
Poland . .na .
Spain . . .
Greece . . .
Bulgaria . .na .
Romania . . .
Chile . . .
Costa Rica . . .
Trinidad & Tobago . . .
Paraguay . . .
Jamaica . . .
Panama . . .
Hong Kong . . .
Argentina . . .
Portugal . . .
Venezuela . . .
Sri Lanka . . .
Singapore . . .
Philippines . . .
Mexico . . .
Colombia . . .
South Africa . . .
Albania . .na .
Mauritius . . .
South Korea . . .
Brazil . . .
 European Review of Economic History

Table . Continued.

Ecuador . . .
Peru . . .
Bahrain . .na .
Malaysia . . .
Thailand . . .
Turkey . . .
Nicaragua . . .
Mongolia . .na .
Guatemala . . .
Honduras . . .
Bolivia . . .
Indonesia . . .
Algeria . . .
Iran . . .
Tunisia . . .
Egypt . . .
Zaire . .na .
Lesotho . . .
Haiti . .na .
Angola . .na .
Botswana . . .
India . . .
Swaziland . . .
China . . .
Sudan . .na .
Nigeria . . .
Nepal . . .
Mozambique . .na .
Malawi . . .

Sources: Crafts (a, ) updated and using Maddison () and UNDP (), see
text.

variable. These changes have two aspects. First, as already stated the new
formula for I is adopted. Second, the income data for the years ,
and are based on the estimate for given in UNDP () worked
back through time using the growth rates in Maddison (). The esti-
mates for HDI in and for the countries observable in , shown
for comparison in Table , are taken directly from UNDP ().

. Discussion
The new HDI scores differ from the earlier estimates in a predictable way
reflecting the adjustment to the income variable in the new formula. As
would be expected, for Western Europe and the other leading economies of
 The Human Development Index , revised

, HDI in that year is a bit higher while HDI in is a little lower and
for is appreciably lower. For India both in and in HDI is
increased as is HDI in in China, Africa, East Asia and the poorer coun-
tries in Latin America.
More generally, a consequence of the revision to HDI is to reduce the
gaps between the leading economic area on the one hand and Africa and
India on the other, both in and in , as is reflected in the results
reported in Table . Thus, using the old formula, the gap for India was
. in and . in and that for Africa was . in
(Crafts, ), compared with ., . and . respectively with the
new formula. It is still true, however, that with the new formula the gap
between Africa and the leading areas has narrowed appreciably since .
Table reports that the gap between the weighted average of the African
observations and North America and Western Europe had fallen to .
and ., respectively, by .
Table examines progress between and in more detail and
reports both on absolute changes in HDI and on the extent to which coun-
tries reduced the distance between their initial HDI and the maximum
attainable score of . As might be expected, absolute increases in HDI are
generally to be found greatest in countries that were some way behind the
leaders in , although, with the notable exception of China, this does not
hold true of the least advanced countries. But the possibilities of improving
HDI were so favourable in this period, given the mortality environment,
that even very poor performers in the Third World saw gains of around
..
Turning to the second column of Table , we see more clearly the pat-
tern of relative success and failure in improving HDI performance and this
is not very surprising. The outstanding performers are among well-known
cases of rapid catch-up growth in Asia (Japan, South Korea, Singapore,
Hong Kong) and in Europe (Spain, Finland, Portugal, Italy). The worst
outcomes are predictably to be found in Africa (Mozambique, Zaire,

Table . Weighted averages of HDI.

Australasia . . . .
North America . . . .
Western Europe . . . .
Africa . .
China . .
India . . .

Sources: As Tables to . Averages weighted by population size relate to countries

appearing in those tables.
 European Review of Economic History

Table . Progress in HDI, .

Absolute change % Maximum possible

New Zealand . .
USA . .
Netherlands . .
Switzerland . .
Denmark . .
Australia . .
Sweden . .
Norway . .
Canada . .
UK . .
Belgium . .
Germany . .
Ireland . .
France . .
Czech Republic . .
Austria . .
Finland . .
Hungary . .
Russia . .
Uruguay . .
Japan . .
Italy . .
Poland . .
Spain . .
Greece . .
Bulgaria . .
Romania . .
Chile . .
Costa Rica . .
Trinidad & Tobago . .
Paraguay . .
Jamaica . .
Panama . .
Hong Kong . .
Argentina . .
Portugal . .
Venezuela . .
Sri Lanka . .
Singapore . .
Philippines . .
Mexico . .
Colombia . .
South Africa . .
Albania . .
Mauritius . .
South Korea . .
Brazil . .
Ecuador . .
 The Human Development Index , revised

Table . Continued.

Absolute change % Maximum possible

Peru . .
Bahrain . .
Malaysia . .
Thailand . .
Turkey . .
Nicaragua . .
Mongolia . .
Guatemala . .
Honduras . .
Bolivia . .
Indonesia . .
Algeria . .
Iran . .
Tunisia . .
Egypt . .
Zaire . .
Lesotho . .
Haiti . .
Angola . .
Botswana . .
India . .
Swaziland . .
China . .
Sudan . .
Nigeria . .
Nepal . .
Mozambique . .
Malawi . .

Source: Derived from Table ; the maximum possible improvement in HDI is

( HDI).

Angola). The negative impact of communism and its aftermath is also

clearly reflected, obviously in Russia but also in the mediocre outcome for
countries such as the Czech Republic and Hungary.
As with the earlier estimates, HDI scores in todays poor countries com-
pare very favourably with those of the leaders in . Thus Sierra Leone,
which at . has the lowest HDI figure in UNDP () is roughly on a
par with Japan and Italy in , while the score of . for Australia in
would only rank rd in the world in , just above Kenya. These
results are driven by the vast worldwide improvement in life expectancy
during the twentieth century which saw life expectancy rise to at least
years at birth in all countries in the world by , greater than the .
years obtaining in the UK in (Crafts a). Despite distressing falls
 European Review of Economic History

in life expectancy in some African countries in the recent past, for example,
in Mozambique and Swaziland from . and . years in to . and
. years in , respectively, mortality still looks quite good relative to
.
Any index which, like HDI, gives a substantial weight to life expectancy
is likely to show that todays developing countries have living standards that
are impressive by nineteenth century standards. This raises the issue of
whether the revised version of HDI gives undue regard to mortality experi-
ence. As before, HDI embodies implicit trade-offs between the compo-
nents. A one unit increase in HDI results from an increase in literacy by
. percentage points or of enrolment by . percentage points or of life
expectancy by . years. The required gain in income depends on the level;
at $, it is about $, at $, about $, at $, about $ and
so on. This proportionality is an attractive feature of the new version of the
index since it implies that the value attached to reducing mortality risks has
a unitary income elasticity which is consistent with the empirical evidence
(Miller ). Moreover, the implied valuation that a years increase in life
expectancy is worth $ in GDP/head at the $, income level is rea-
sonable given that the best-guess value of a statistical life is times
GDP/person. Thus, the weight given to life expectancy relative to income
in the HDI appears to be justifiable, and its implication that human devel-
opment in many of todays developing countries is higher than that in the
leaders of deserves to be taken seriously.
During the twentieth century the gap between real GDP/person in the
poorest and the richest countries widened dramatically the experience has
been described as one of divergence, big time (Pritchett ). This is
reflected in Table which reports estimates of the distance between aver-
age national incomes of the lowest per cent of the worlds population and
the top per cent and shows that it rose -fold between and .
If we use each country as a data point for growth regressions, it is also
appropriate to stress strong elements of divergence in the twentieth century
experience.
On the other hand, as Sala-i-Martin puts it, when we give each citizen,
one data point, the picture changes radically (Sala-i-Martin , p. ).

The value of a statistical life is defined as the total price that the population is willing to
pay to reduce its expected death toll by . Thus if million people are each willing to
pay . pence for a public health improvement that is expected to save one life, the
value of a statistical life is million. The literature survey conducted by Miller ()
concluded that a good rule of thumb from a wide range of international research is that
this is around times GDP/person. Employing the calculations in Crafts (), using
this assumption for the period would imply a valuation for a one-year gain in
life expectancy at that time of about $ in a country whose income level grew from
$, in to $, in measured in $PPP. This is reasonably close to the
valuation implied by the HDI.
 The Human Development Index , revised

Table . Inequality in real GDP/person and HDI: the top and bottom
per cent of world population compared.

Top % Bottom % Ratio Gap

Real GDP/person
. ,
, . ,
, . ,
, . ,
, , . ,
HDI
. . . .
. . . .
. . . .

Note: In HDI of bottom per cent assumed equal to India and for based on
the observations in Table rather than the whole world population ( per cent of total).
Sources: Derived from Maddison (), based on real GDP measured in Geary-
Khamis dollars and from Tables and .

This is in particular because in recent decades rapid growth in populous

countries such as China and India and the decrease in the share of world
population in OECD countries has led to a decline in overall income
inequality. Boltho and Toniolo (, p.) estimated that the Gini-coeffi-
cient for worldwide income distribution rose from . in to . in
, and a peak of . in , before falling back to . in . The
comparisons of the ratio of the incomes of the top and bottom per cent
in Table based on a more recent data set bear out this result; although the
ratio of . in is way above that of . in , nevertheless it is lower
than the . in .
The results for across-country inequality in HDI reported in Table sug-
gest the need for even more caution in using the notion of divergence, big
time. The ratio of HDI in the top and bottom per cent is much lower in
than in and the absolute gap has even been reduced somewhat
from . to . if it is reasonable to let India stand for the bottom
This calculation (and the comments on Table ) does not take account of within-country
income inequality. This is unlikely to be seriously misleading, however, as it is generally
agreed that virtually all the trends in world inequality are accounted for by the across-
country rather than the within-country component. When sophisticated adjustments are
made to allow for the latter, the recent reduction in global inequality is unaffected (Sala-
i-Martin ).
If we assume that China was no higher than India in , then this calculation is
unlikely to be seriously misleading. In , the estimates in Table show an HDI of
. for China compared with . for India, and in real GDP per person in
China was $ compared with $ in India (Maddison ).
 European Review of Economic History

per cent. This is, of course, partly a reflection of the way income is treated
in the formula for HDI but it also reflects the much lower inequality in life
expectancy than in income across the world. Melchior et al. (, p. )
calculated a population-weighted Gini coefficient for life expectancy for
countries and found that it fell from . in to . in .
Another way of getting a sense of widespread progress is to look at tran-
sitions from low ( .) to medium (..) to high ( .) human
development. By , countries with a total population of million
were classified by UNDP () as high, countries with ,m people
as medium and only countries with ,m people as low. By contrast,
in only a select few countries had just reached medium human devel-
opment and none was anywhere near high, a level that the leading two
economies had just attained in . Even at the end of the Golden Age of
postwar growth high levels of human development were confined to the
original OECD area.
Overall, viewing the twentieth century through the lens of the HDI rather
than on a national accounts basis gives a distinctly more optimistic picture
of the experience of economic development in the third world.
Improvements in life expectancy were a major achievement worth a great
deal to the average person and should be given much more prominence by
economic historians.

Ackowledgements
Comments from two anonymous referees are gratefully acknowledged. I am, of
course, responsible for any errors.

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