Development Indices with Particular focus on Human

Development Index (HDI)

Dr. M. Abu Eusuf
Professor, Department of Development Studies
University of Dhaka
E-mail: eusuf101@yahoo.com
Phone: 9634580, 01711287444

MDS 11, University of Dhaka

Issues to be Covered
Development Indicators

Development Indices
Human Development
Human Development Index including Hands-

on-exercise

Development Indicators
Every development indicators is based on a particular

concept or definition of development, involving specific

values, goals and standards.
In the 1960s development was considered as an
increase in per capita income and hence the indicator
used in that period was GNP per capita.
GNP per capita - a necessary condition for
development
In the 1980s Development emerged as a
multidimensional concept
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Development Indices
Physical Quality of Life Index (PQLI)
Human Development Indices:
Human Development Index (HDI)
Human Poverty Index (HPI)
HPI-1 for Developing countries & HPI-2 for OECD countries

Gender-related development index (GDI)

Gender empowerment measure (GEM)
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Development Indices
Physical Quality of Life Index (PQLI)
measure the quality of life or well-being of a
country.
Developed in 1979 by Morris Davis Morris
Indicators: basic literacy rate, infant mortality,
and life expectancy at age one.
criticized because there is considerable overlap
between infant mortality and life expectancy
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Development Indices
Human Development Indices:
Human Development Index (HDI)
A long and healthy life (Life expectancy at birth)
Knowledge (Average years of schooling and expected years of

schooling)
A decent standard of living (GNI per capita - PPP US$)

Human Poverty Index (HPI)

HPI-1 for Developing countries &
HPI-2 for OECD countries
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Development Indices
HPI-1 for Developing countries

Deprivation in a long and healthy life (Probability at

birth of not surviving to age 40)

Deprivation in Knowledge (Adult illiteracy rate)
Deprivation in a decent standard of living (Percentage
of population not using an improved water source &
Percentage of children under weight-for-age)

Development Indices
HPI-2 for OECD countries
Deprivation in a long and healthy life (Probability at

birth of not surviving to age 60)

Deprivation in Knowledge (Percentage of adults
lacking functional literacy skills)
Deprivation in a decent standard of living (Percentage
of people living below the poverty line)
Social exclusion (Long-term unemployment rate)
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Development Indices
Gender-related development index (GDI)
GDI adjusts inequalities between men and women

Gender empowerment measure (GEM)

Political participation and decision-making (Female and male

shares of parliamentary seats)

Economic participation and decision-making Female and male
shares of positions as legislators, senior officials and managers
& Female and male shares of professional and technical
positions
Power over economic resources (Female and male estimated
earned income)
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Human Development
In Dickens novel Hard Times Mr. Bounderby
observed that nothing would satisfy his workers, what
the workers really needed, beyond a living wage, was
to be treated like human beings.
Human Development, which is an approach
developed in the context of the UN system, tries to
combine growth with a people centered approach to
development, and has become an important synthesis
in development thinking.
The Human Development Approach is concerned to
establish that income growth alone doesnt always
automatically lead to improved quality of life for all.
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The State of Human Development

The basic objective of development, wrote Mahbub ul Haq in
the first Human Development Report in 1990, is to create an
enabling environment in which people can enjoy long, healthy and
creative lives.

People are the real wealth of nations. That simple truth is

sometimes forgotten.

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Human Development Index (HDI)

The Human Development Index (HDI) is a
comparative measure of life expectancy, education,
and standard of living for countries worldwide.
It is a standard means of measuring well-being
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 and has been used since then
by the United Nations Development Programme in its
annual Human Development Report.
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Human Development Index (HDI)

The Human Development Index (HDI) is a summary

measure of key dimensions of human development.

It measures the average achievements in a country in
three basic dimensions of human development:
a long and healthy life,
access to knowledge and
a decent standard of living.
The HDI is the geometric mean of normalized indices
from each of these three dimensions.
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Components of Human Development Index

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Components of Human Development Index

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Human Development Index

A

long and healthy life is measured by life

expectancy.
Access to knowledge is measured by:
i) mean years of schooling for the adult population,
which is the average number of years of education
received in a life-time by people aged 25 years and
older; and
ii) expected years of schooling for children of schoolentrance age, which is the total number of years of
schooling a child of school-entrance age can expect to
receive if prevailing patterns of age-specific enrolment
rates stay the same throughout the child's life.
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Human Development Index

Standard of living is measured by Gross National

Income (GNI) per capita expressed in constant 2005

international dollars converted using purchasing
power parity (PPP) rates.

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Categories of Human Development Index

Very High Human Development Index:0.900 -1
High Human Development Index: 0.699-0.899
Medium Human Development Index:0.5220.698
Low
0.521

Human Development Index: HDI below

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Human Development Report 2010

20th Anniversary Edition
The Real Wealth of Nations: Pathways
to Human Development
The first Human Development Report in 1990 opened with the simply stated
premise that has guided all subsequent Reports: People are the real wealth of a
nation.
By backing up this assertion with an abundance of empirical data and a new way
of thinking about and measuring development, the Human Development Report
has had a profound impact on development policies around the world.
This 20th anniversary edition features introductory reflections by the Nobel Prize
winning economist Amartya Sen, who worked with series founder Mahbub ul Haq
on the conception of the first Human Development Report and contributed to and
inspired many successive volumes.

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Human Development Report 2010

20th Anniversary Edition
The 2010 Report continues the tradition of pushing the frontiers of development
thinking.
As Amartya Sen writes: Twenty years after the appearance of the first Human
Development Report, there is much to celebrate in what has been achieved. But
we also have to be alive to ways of improving the assessment of old adversities
and of recognizingand responding tonew threats that endanger human wellbeing and freedom.

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Bangladeshs HDI Value and Rank -2013

The 2013 Human Development Report presents

Human Development Index (HDI) values and ranks for

187 countries
Bangladeshs HDI value for 2012 is 0.515in the low
human development categorypositioning the country
at 146 out of 187 countries.
Between 1980 and 2012, Bangladeshs HDI value
increased from 0.312 to 0.515, an increase of 65
percent or average annual increase of about 1.6
percent.
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HDI Ranking based on HDR 2013

The Rise of the South:
Human Progress in a Diverse World

HDI Rank

Country

HDI Value

Norway

.955

Australia

.938

USA

.937

11

Canada

.911

26

UK

.875

92

Sri Lanka

.715

136

India

.554

146

Bangladesh

.515

146

Pakistan

.515

157

Nepal

.463
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HDI Trends (1980 2012): Bangladesh

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Trends in Bangladeshs HDI component indices

1980-2012

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Trends in Bangladeshs HDI 1980-2012

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Bangladeshs HDI indicators for 2012 relative to

selected countries and groups

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Hands-on-exercise:
Steps to calculate the Human Development Index
There are two steps to calculating the HDI.

Step 1. Creating the dimension indices

Minimum and maximum values (goalposts) are set in

order to transform the indicators into indices between

0 and 1.
The maximums are the highest observed values in the
time series (19802012).
The minimum values are set at 20 years for life
expectancy, at 0 years for both education variables
and at $100 for per capita gross national income
(GNI).
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Steps to calculate the Human Development Index

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Steps to calculate the Human Development Index

Having defined the minimum and maximum values, the

subindices are calculated as follows:

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Human Development Index (HDI)

Each of the indices is computed according to
the following general formula:
Index = [Actual Value Minimum Value]/
[Maximum Value Minimum Value]
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
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variable x can attain, respectively.

Steps to calculate the Human Development Index

For education, equation 1 is applied to each of

the two subcomponents, then a geometric mean
of the resulting indices is created and finally,
equation 1 is reapplied to the geometric mean
of the indices using 0 as the minimum and the
highest geometric mean of the resulting indices
for the time period under consideration as the
maximum.
This is equivalent to applying equation 1 directly
to the geometric mean of the two
subcomponents.
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Steps to calculate the Human Development Index

Step 2. Aggregating the subindices to produce

the Human Development Index

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Hands-on-exercise for Ghana

Example: Ghana

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Steps to calculate the Human Development Index

Example: Ghana

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Steps to calculate the Human Development Index

Example: Ghana

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Hands-on-exercise for Bangladesh

Example: Bangladesh
Indicators

Value

Life expectancy at birth (years)

69.2

Mean years of schooling

4.8

Expected years of schooling

8.1

GNI per capita (PPPS)

1,785
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Hands-on-exercise for Bangladesh

Example: X
Indicators

Value

Life expectancy at birth (years)

79.2

Mean years of schooling

8.8

Expected years of schooling

12.1

GNI per capita (PPPS)

4,785
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