What is the Human Development Index?
Human Development Index (HDI) is a measure of welfare developed by the United Nations Development Programme (UNDP) aimed at categorising countries based on their level of development. HDI overcomes some of the shortcomings of the Gross Domestic Product (GDP) as a measure of the well-being or living standards of a country’s citizens. GDP is just a quantitative measure of a country’s output; it does not consider many factors that can positively or negatively affect people’s well-being. For example, GDP does not account for the effect of air pollution arising from production on people’s welfare.
HDI combines three indicators of economic development, namely life expectancy at birth, education and average income. The combination of these indicators produces a number between zero and one; the closer a country’s HDI value is to one, the more developed it is and the closer it is to zero, the less developed a country it is. The HDI value facilitates the classification of countries into four groups: Very High Human Development, High Human Development, Medium Human Development and Low Human Development.
Table 1: Human Development Index, 2023
| HDI Rank | Country | HDI Value |
| Very high human development | ||
| 1 | Iceland | 0.972 |
| 2 | Norway | 0.970 |
| 2 | Switzerland | 0.970 |
| High human development | ||
| 75 | Iran (Islamic Republic of) | 0.799 |
| 76 | Saint Vincent and the Grenadines | 0.798 |
| 76 | Thailand | 0.798 |
| Medium human development | ||
| 125 | Bhutan | 0.698 |
| 126 | Eswatini (Kingdom of) | 0.695 |
| 126 | Iraq | 0.695 |
| Low human development | ||
| 168 | Pakistan | 0.544 |
| 169 | Senegal | 0.530 |
| 170 | Gambia | 0.524 |
Source: UNDP
Life expectancy at birth
This is the average number of years a newborn is expected to live for. It is a health measure that determines whether the life-time of a country’s population is short or long. A life expectancy index is computed from this.
Education
HDI uses an education index to determine how knowledgeable or well-read the population is. It considers the mean year of schooling of adults aged 25 years and above and the expected years of schooling for school-entering age children.
Gross National Income (GNI) per capita
This is the average income attributable to each citizen of a country. It determines the ability to maintain an acceptable living standard. GNI Per Capita is obtained when the GNI is divided by the population. GNI is the income realised by the citizens of a country living at home and abroad. GNI Per Capita is adjusted using Purchasing Power Parity (PPP) in order to remove the impact of differences in price levels among the countries considered. A GNI index is computed from this.
Usefulness of the HDI
Composite measure of well-being
The HDI captures more indicators of economic development than just a single indicator. It is an internationally accepted measure of development because it combines average income, education and health to give a better idea of the level of economic development of a country.
Comparing with other countries or previous years
The HDI is published regularly by the United Nations Development Programme. Every country is assigned a rank based on its computed HDI value which may change from year to year. It shows the progress made by a country when compared with other countries or previous years.
Policy formulation
The HDI value of a country reveals areas that require intervention by the government. If the country scores low in educational attainment, for example, the government may formulate policies that can improve access to education.
Limitations of HDI
The HDI is a composite measure of welfare incorporating three areas of education, life expectancy and GNI per capita. It does not consider many other indicators of development, such as poverty, environmental pollution, income distribution, population growth rate, and economic structure.
Distribution of income
The HDI uses the average income (GNI per capita) in its computation. GNI per capita does not tell us whether a few people control the bulk of the income or wealth of the country, while the majority of the residents have low income. In other words, there may be inequality of income even though the HDI is boosted by a high average income.
Environmental pollution
Pollution affects the quality of life negatively. But this is not shown by the HDI. This is a limitation of GDP, which is used in calculating GNI per capita, a component of HDI.
Other indicators ignored
HDI ignores other factors that measure economic development such as poverty, population growth rate, economic structure, access to clean water and a safe environment. These factors measure the well-being of a county’s citizens. Unfortunately, they are not captured in the HDI
Data reliability
To compute HDI, data about many countries are obtained. However, the accuracy of these data cannot be guaranteed. As a result, HDI may not be completely reliable.