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Human Development Index, Physical

Quality of Life Index and Socio-
Economic Development

HDI- Introduction

 “The basic objective of development is to create an

 enabling environment in which people can enjoy long,
healthy and creative lives.” wrote Mahbub-ul-Haq in the
first Human Development Report in 1990.
 The Human Development Index (HDI) is the measure
of life expectancy, literacy, education, and standard of
living for countries worldwide.
 It is used to determine and indicate whether a country is
a developed, developing, or underdeveloped country.
 The index was developed in 1990 by Indian Nobel prize winner
Amartya Sen, Pakistani economist Mahbub ul Haq, with help from
Gustav Ranis of Yale University and Lord Meghnad Desai of the
London School of Economics.
 The HDI measures the average achievements in a country in three
basic dimensions of human development:
 A long and healthy life, as measured by life expectancy at birth.
 Knowledge, 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).
 A decent standard of living, as measured by the log of gross
domestic product (GDP) per capita at purchasing power
parity (PPP) in USD.
How to Calculate HDI

•In general to transform a raw variable, say x, into a unit-free index between
0 and 1 (which allows different indices to be added together), the following
formula is used:
x-index =

where and are the lowest and highest values the variable
x can attain, respectively.
•The Human Development Index (HDI) then represents the average of the
following three general indices:

Life Expectancy Index =

Education Index =
 Adult Literacy Index (ALI) =

 Gross Enrolment Index (GEI) =

 GDP Index =

 where, LE: Life expectancy at birth

ALR: Adult literacy rate (ages 15 and older)
CGER: Combined gross enrolment ratio for primary, secondary and
tertiary schools
GDPpc: GDP per capita at PPP in USD.
World Map Indicating Human
Development Index 2006

• ██ high (0.800–1)
• ██ medium (0.500–0.799)
• ██ low (0.300–0.499)
• ██ 2006 data not available
Some Facts about HDI

 India HDI- 0.611

 Norway highest ranked since 2001
(HDI=0.965).
 Niger lowest ranked (HDI= 0.311).
 Canada dominated in the 90’s.
Why Use HDI?

 Relates the Money available to its utilization by

and for the Public.
 HDI reflects the positive association between
HDI

income on one side and health and education

on the other.
 Shows the efficiency of the Government
policies.
Examples of Invert Performance of
Countries
Angola and
Bahrain and Chile
Tanzania Namibia and Egypt
Drawbacks

 Anomalous Data results in erroneous values.

 The index is not in any sense a comprehensive
measure of human development.
 It does not include important indicators such as
respect for human rights, democracy and
inequality.