Human Development Index (HDI)

Human Development Index (HDI)

The Human Development Index was introduced by the UNDP in 1990 (associated with the economists Mahbub ul Haq and Amartya Sen) as a composite measure of development built on three dimensions:

1. A long and healthy life — measured by life expectancy at birth.
2. Knowledge (education) — measured by mean years of schooling of adults aged 25 and above, and expected years of schooling for children entering school.
3. A decent standard of living — measured by Gross National Income (GNI) per capita, PPP-adjusted.

Computing HDI

Each dimension is first converted into a dimension index between 0 and 1, using fixed minimum and maximum goalposts:

Standard UNDP goalposts: life expectancy 20 to 85 years; mean years of schooling 0 to 15 years; expected years of schooling 0 to 18 years; GNI per capita 100 to 75,000 PPP-adjusted dollars (the income dimension actually uses the natural log of GNI per capita in the goalpost formula, since the welfare gain from an extra unit of income is smaller once income is already high).

The Education Index is the simple average of the mean-years-of-schooling index and the expected-years-of-schooling index. Since 2010, the overall HDI has been computed as the geometric mean of the three dimension indices, not a simple average:

Using a geometric mean (rather than an arithmetic mean) means a very low score on any one dimension pulls the overall HDI down more sharply — a country cannot fully compensate for poor health or poor education simply by having a high income.

HDI categories (UNDP)