Human Development Index (HDI)

Solely relying on income and GDP statistics to refer to a country's progress in the contemporary world concerning human economics and international development is no longer sufficient. While the generation of wealth is of utmost importance, every development should result in a purposeful advancement in the life of every individual, which means having the right to acquire education and being able to live a healthy life. The Human Development Index HDI is a development by the UNDP which attempts to measure development in a more complete human and social way.

The HDI was introduced in 1990 by the Pakistani economist Mahbub ul Haq and the Indian Nobel laureate Amartya Sen. Its combination and the way it is implemented in statistical indicators reshaped development. HDI was a clear indicator that development is measured by human welfare and should be the first thing on people's policies, not in the economy.

What is The Human Development Index (HDI)?

The Human Development Index (HDI) is a composite indicator which evaluates three basic dimensions of human development:

• Health: measured by life expectancy at birth.
• Education: measured by mean years of schooling and expected years of schooling.
• Standard of living: measured by Gross National Income (GNI) per capita (PPP).

The HDI captures information between 0 and 1. 

• Countries closer to 1.0 have higher levels of human development.
• Countries closer to 0.0 show lower human development.

It facilitates international assessments relating to wellbeing, development, and disparity.

The formula for HDI is: 

HDI = Arithmetic mean of the normalized indices of Health, Education, and Income.

Key Components of HDI in Detail

The development and implementation of the Human Development Index (HDI) has redirected global attention from the purely quantitative approach of growing economies to the qualitative approach of nurturing people. It reflects the intent of development, which is to enable people to live long, healthy, and meaningful lives. While it is not without limits, the Human Development Index continues to be one of the most effective measures of the public policies, international aid, and the development objectives of a nation. 

The key categories of HDI by UNDP based on the HDI score into 4 tiers:

HDI Range	Development Category
0.800-1.000	Very high human development
0.700-0.799	High human development
0.550-0.699	Medium human development
Below 0.550	Low human development

1. Life Expectancy Index (LEI)

•  Represents the average years a newborn is expected to live.
•  Represents the level of healthcare, nutrition, and living conditions.

2. Education Index (EI)

Calculated using: 

• Mean Years of Schooling (average years of schooling for people aged 25 and above).
•  Expected Years of Schooling (the number of years a child entering school is expected to spend).
•  Access to knowledge, literacy, and skill development.

3. Income Index (II)

• Based on GNI per capita (PPP) adjusted.
• Reflects the capability of a person to afford the necessities of life.

Key Features of HDI 

Inequality within countries, gender gaps, and even the environment and sustainability of a nation are just part of the larger picture and don't get taken into HDI calculations. This is the reason why IHDI and GDI exist.

Human-Centric Approach

Like with all indicators used in measuring development, HDI puts a human in the center, unlike GDP, which is focused solely on a human's output.

Composite Index

Instead of just using a singular indicator, HDI incorporates health, education, and income, making it more convenient to understand with a singular score.

Global Comparability

With the use of HDI, nations are able to evaluate and compare the development gaps of different countries and regions, which aids policymakers in goal setting and development targets.

Focus on Long-Term Wellbeing

It places a more positive focus on sustainable development, which is to improve the lives of people in the long term, rather than a short-term economic uplift.

Inclusive Perspective

The index has the aim of alleviating poverty, illiteracy, disease, and inequality, in particular, Social Inclusion.

 

Did you know? Norway has ranked at the top of the HDI for several years because of its public healthcare, education, and overall retirement and life quality. This outpaces their economies in comparison to other larger countries.

 

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Frequently Asked Questions (FAQs)

What is the difference between HDI and GDP?

Centered around human developments, HDI takes into consideration health, education, and other crucial factors while GDP is purely economic output.

What is indicated through a high HDI?

Countries that are able to sustain high HDI scores offer:

• High life expectancy
• Quality education
• Advanced standards of living

What is India ranked in HDI?

In the 2023 UNDP Human Development Report, India falls around 134 out of 193 countries. India is seated in the Medium Human Development category, improving greatly in the designated areas of health and education.