published on 3 November 2011 in energy
Human Development Index
People are the real wealth of a nation
“People are the real wealth of a nation.” With these words the first Human Development Report , published in 1990 by the United Nations Development Programme (UNDP), began. The Report was really innovative in that period, because it introduced the Human Development Index (HDI), which was devised in those years by the Pakistani economist Mahbub ul-Haq, and with it, a new way to conceive human development. The development of a country in fact, until then, was evaluated exclusively on the basis of the traditional economic growth indicators, such as the Gross National Product (GNP), while with HDI, factors such as literacy and life expectancy, were analyzed for the first time, and not only the income or consumer goods. The first report was greeted with great enthusiasm by politicians, researchers and economists, and it radically modified the concept of the evolution of society and human development.
For further information about the Human Development Report and the Human Development Index, visit the UNDP website
The three dimensions of human development
A long and healthy life, access to knowledge and education and a decent standard of living, are the three dimensions on which the Human Development Index is based. HDI is therefore calculated on the basis of the following dimensions:
- A long and healthy life the possibility of living a long and healthy life, gives us information regarding the conditions of life of each individual (food, health, home, etc) This dimension is measured by life-expectancy at the time of birth.
- Access to education: this shows the individual’s possibility to communicate, to have access to information and to participate in the life of the community. This dimension is measured through the average number of years of education and the expected number of years of education.
- A decent standard of living: measured with the help of the pro-capita Gross National Income (GNI), in terms of equal purchasing power in US dollars.
Out of these dimensions, three indexes are calculated.
- Life expectancy index;
- Education index, consisting of the Mean years of education index and the Expected years of education index;
- Income index.
Finally, HDI is calculated as the geometric mean of the three indexes. Therefore the Human Development Index summarizes, with a simple number, a multitude of data related to life expectancy, basic education and minimum income, which would otherwise be difficult to interpret, especially for those who do not specifically belong to the sector. Similarly to the GNP, HDI is a raw index that can be used as a unit of measure of human development, without however neglecting whatever is not only income and consumer goods.
New report, new indexes
The Human Development Report, 2010 introduced three new indexes that integrate the traditional Human Development index:
- Human Development index, adjusted for inequality: for the first time the Human Development Report introduces the inequality factor in the Human Development index, adjusting the HDI results so that they also take into account the differences in income, health and education in the countries. This index will be analyzed in greater detail later.
- Gender inequality index: this new index includes maternal death rate and female representation in parliament, and allows the evaluation of the negative impact on human development of the economic and social disparities that exist between men and women.
- Multidimensional poverty index: this new index integrates the measurements of poverty based on income and indicates the number of people that are multidimensionally poor (i.e. they are poor not only because their income is low, but also because they cannot avail of basic goods and services) and the deprivations they face at a family level.
The Multidimensional Poverty index evaluates the deprivations of an individual in the three dimensions analyzed by the Human Development index, i.e. standard of living, health and education. In order to do so, it uses 10 indicators, such as, for example, access to electricity and clean water, child mortality, years of education, level of nutrition etc., and defines an individual “poor” if he/she does not have access to more than three of these indicators.
Human Development Report 2010
UNDP has now reached the twentieth edition of the Human Development Report, entitled “The Real Wealth of Nations: Pathways to Human Development – 20th anniversary edition“, 2010.
World HDI, equal to 0.62, has increased 18% since 1990 (and 41% since 1970), thanks to the large steps forward made in the field of the three dimensions of the index (life expectancy, education and quality of life).
The first 10 nations in HDI 2010 are Norway, Australia, New Zealand, United States, Ireland, Liechtenstein, the Netherlands, Canada, Sweden and Germany. At the bottom of the list of 169 nations included in the HDI 2010, in order, we find: Mali, Burkina Faso, Liberia, Chad, Guinea-Bissau, Mozambique, Burundi, Niger, Democratic Republic of Congo and Zimbabwe. Out of the bottom 30 countries in the list, only two are not Sub-Saharan African countries, Haiti (145th) and Afghanistan (155th) . In the last 40 years, only three countries had a lower Human Development Index in 2010 than in 1970: the Democratic Republic of Congo, Zambia and Zimbabwe.
Italy ranks 23rd , behind the European countries such as Switzerland (13th), France (14th), Finland (16th), Iceland (17th), Belgium (18th) Denmark (19th), Spain (20th) and Greece (22nd), however it ranks better than Luxemburg, Austria and Great Britain that rank 24th , 25th, and 26th respectively.
The 10 “Top Movers” which were highlighted in the 2010 Report, i.e. the countries with the most marked improvements in terms of HDI during the course of the past 40 years, are led by Oman. The other nine “Top Movers” are China, Nepal, Indonesia, Saudi Arabia, Laos, Tunisia, South Korea, Algeria and Morocco.
HDI , adjusted for inequality
A novelty in the Human Development Report 2010 was the introduction of the Human Development Index adjusted for inequality (Inequality HDI – iHDI). The iHDI measures the average level of human development of the population in a determined society, taking into account the level of inequality that is present in a country. The HDI, which is an aggregate of national means, hides the disparities existing between the different countries; in the presence of inequality in fact not all people have equal access to education and to an income that allows them to have a decent standard of living., nor do they have the same life expectancy at birth. Therefore the Human Development Index, adjusted for inequality, provides a more complete picture of the wellbeing of the people and highlights not only the disparities between countries but also the differences within the countries.
Therefore, iHDI is less than HDI, the greater the difference between the two, the greater the inequality.
With the introduction of the index adjusted for inequality, global HDI has passed from 0.62 to 0.49, and has come down from the category of high HDI to that of medium HDI. The countries with a low level of human development show greater inequality in all three dimensions and therefore account for the more consistent losses in human development.
In order to better understand the index adjusted for inequality, we can analyze the graph HDI e Inequality HDi in the left menu. The graph compares the world population subdivided according to HDI, and inequality HDI. The introduction of the index adjusted for inequality involves a remarkable decrease in the value of the indicator, compared to the non adjusted value and an increase in the percentage of the population with a low index. If we consider the non adjusted index in fact, 16% of the population is classified in the lower development, 51% in the medium development and 18% and 15% respectively in the high and very high development. Instead, considering the iHDI, the situation changes remarkably. The population that is classified in the lower development range is equal to 39%, more than twice the amount of the HDI, the medium development group and the high and very high development groups instead are decreased 43%, 7% and 11% respectively.
One of the dimensions used to calculate the HDI, is life expectancy at birth. The graph on Life expectancy on the left menu relates life expectancy at birth (expressed in years, and represented by the histograms – scale on the left) of the world population, with a daily pro capita income (the red curve refers to the scale on the right). Each bar of the histogram represents a country and its thickness is proportional to the population in that country. The countries have been arranged according to the ascending pro-capita income. On a world scale, life expectancy at birth is 69.3 years, however it drops to 56 years for the developing countries with a low income, while it increases to 80.3 for countries with a high income and human development. In the United States a life expectancy below 50 years was recorded at the end of 1800, and therefore more than a century ago, while a life expectancy slightly under 70 years was recorded in the 50s – 60s of 1900.
In order to better evaluate the dimension of life expectancy and to understand how the world population has access to healthcare, it is opportune to analyze the graph regarding child mortality on the left menu. The graph shows the relation between child mortality (represented by the number of deaths per thousand births – scale on the left) and the pro-capita income. As in the case of the previous graphs, each bar of the histogram represents a country and its width is proportional to the population of that country. The countries are arranged according to ascending pro capita income.
It can be noted that on average, on a world scale, the number of deaths before 5 years, every 1000 births is equal to 63 children, however there is enormous inequality between the number of deaths in the countries with low human development (134) and in countries with very high human development (6). In other words, the higher the income and the development of a country, and the lower the child mortality in the first 5 years of life.
Yet another indicator to evaluate the dimension of health are the healthcare expenses. The graph on healthcare expenses (left menu) shows the relation between yearly healthcare expenses pro capita, (represented by the scale on the left) and the pro-capita income (red curve – scale on the right). It can immediately be observed that the world healthcare expenses increase proportionally with the income. On a world scale, in fact, the healthcare expense pro capita, is equal to 869$, however there is an enormous inequality between the average expense in countries with low human development (66$) and very high human development (4,172 $).
Edited by Alessandra Goria