Published Oct 25, 2023 The Human Development Index (HDI) is a statistic that measures the overall development of a country. It takes into account three dimensions of human development: health, education, and income. The HDI is based on indicators such as life expectancy at birth, years of schooling, and gross national income per capita. To illustrate the concept of the HDI, let’s compare two countries: Country A and Country B. Country A has a life expectancy of 75 years, an average of 12 years of schooling, and a gross national income per capita of $10,000. Country B has a life expectancy of 70 years, an average of 8 years of schooling, and a gross national income per capita of $5,000. To calculate the HDI, we first normalize each indicator between 0 and 1. For life expectancy, we divide 75 by the maximum life expectancy (let’s say 85) to get 0.88. For schooling, we divide 12 by the maximum years of schooling (let’s say 15) to get 0.8. For income, we divide $10,000 by the maximum gross national income per capita (let’s say $50,000) to get 0.2. Next, we take the geometric mean of these normalized values: HDI = (0.88 x 0.8 x 0.2)^(1/3) ≈ 0.52 for Country A and (0.82 x 0.53 x 0.1)^(1/3) ≈ 0.37 for Country B. Based on the HDI, Country A has a higher level of human development compared to Country B, indicating that it has better health, education, and income levels. The HDI provides a broader measure of development than just economic indicators such as GDP. By considering health and education in addition to income, the HDI gives a more comprehensive picture of a country’s overall development. It helps policymakers identify areas for improvement and track progress over time. The HDI also raises awareness about inequalities within and between countries, highlighting the importance of investing in human capital and social well-being.Definition of Human Development Index (HDI)
Example
Why the Human Development Index (HDI) Matters
Economics