HUMAN DEVELOPMENT INDEX Its features and calculations By

HUMAN DEVELOPMENT INDEX Its features and calculations By, By Linchu Elizabeth Samuel Assistant Professor in Economics Christian College, Chengannur

HDI �Developed by Mahbub ul Haq and Nobel Laureate Amartya Sen. �UNDP reports since 1990 �Based on three dimensions of development 1. Health 2. Education 3. Standard of living

HDI-Old Measure HDI, A composite index of three social indicators – life expectancy, Educational attainment (consisted of adult literacy (2/3 rd), Combined Gross Enrolment ratio (1/3 rd)) and real GDP per capita

HDI- New Measure 1. Life expectancy 2. Education or Knowledge availability 3. Per capita income of the concerned people of a country.

Life Expectancy Index (LEI) �Minimum value for life expectancy is fixed at 20 years. Maximum value for life index is kept at 85 years. �LEI = Actual value – Minimum Value/ Maximum – Minimum Value � Life Expectancy Index (LEI) = Life Expectancy of a country -20/ 8520

Education Index (EI) includes two indices. 1. Mean Years of Schooling Index (MYSI)Mean Years of Schooling means the spent years by a 25 years or older person in school. The low value was fixed at 0 and the maximum value for mean years of schooling is fixed at 15. Mean Years of Schooling Index (MYSI) = Mean years of schooling - 0/ 15 - 0

2. Expected Years of Schooling Index (EYSI)- Expected Years of Schooling means years that is to be spent by a 5 year old boy in school in a particular country. �Formula to calculate Expected Years of Schooling Index (EYSI) = Expected Years of Schooling – 0/ 18 – 0 �Education Index is calculated by taking the Arithmetic mean of the MYSI and EYSI

Income Index � To calculate the index, goal posts are set as per observations during 1980 – 2010 in various countries. Gross National Income per capita is taken as measure to calculate new Income Index in new HDI. Minimum income is set as $100 and maximum income is set as $75, 000. � Income Index = Log (Country's GNI pc) – Log ($100) / Log ($75, 000 – Log ($100)

HDI Calculation Formula to calculate Human Development Index (HDI) = (Life Expectancy Index X Education Index X Income Index)1/3. New Human Development Index (HDI) is geometric mean of Life Expectancy Index (LEI), Education Index (EI) and Income Index. (II).

Limitations of HDI � Wide divergence within countries. � HDI reflect long-term changes (e. g. life expectancy) and may not respond to recent short-term changes. � Higher National wealth and GNI may not necessarily increase economic welfare, it depends how it is spent. � higher GNI per capita may hide widespread inequality within a country. � Economic welfare depends on several other factors, such as – threat of war, levels of pollution, access to clean drinking water etc.