Introduction to Human Development Index (HDI)
Human development index or HDI is a tool that measures a country’s development based on its social and economic dimensions. This tool was designed to stress the fact that a country’s development should not be assessed merely based on its economic growth but it should be assessed based on its people and their capabilities.
Both the social and economic dimensions of a country take into consideration the health of its people, their educational capabilities, their standard of living and gross national income (GNI) per capita. The human development index or HDI is calculated by using the normal indices of each of the above three factors; HDI is the mean of these indices.
Human development index is also used to question a country’s national policy and compare the country’s with the same GNI per capita to ask why the human development in these countries is different despite having the same GNI per capita.
What is the Human Development Index (HDI)?
Human development Index or HDI combines the important social and economic aspects of the country to assess the country’s development. HDI utilises three key dimensions of the development of the country’s population that includes the education, standard of living and health of the people based on which the country’s development is assessed.
Human development index or HDI was first created in the year 1990 by Pakistani economist Mahbub Ul Haq. This index is used by the United Nations Development Program (UNDP) to rank countries and is considered to be one of the best statistical tools to assess the country’s development based on its social and economic dimensions.
How is the Human Development Index (HDI) calculated?
Human development index or HDI is calculated by considering four metrics— life expectancy at birth, expected years of schooling, average years of schooling and gross national income per capita or GNI per capita.
Life expectancy at birth is used to assess the long and healthy life, expected years of schooling assesses the knowledge access of the younger generation, average years of schooling assesses the knowledge access of the older generation and gross national income per capita assesses the standard of living.
Using these four metrics, HDI is calculated in two steps:
Step 1:
Dimension Index = actual value − minimum value / maximum value − minimum value
In a country that achieves maximum value, the dimension index is 1 whereas in a country that achieves minimum value, the dimension index is 0. This index is calculated for all four metrics.
Step 2:
HDI = ( I health * I education * I income) / 3
So, HDI is the geometric mean of the indices of the above three dimensions.
