Human Development Index (HDI)

The Human Development Index (HDI) is a statistical report published by the United Nations (UN). It measures the success of many different nations in several key social and economic dimensions. These dimensions include the population’s overall health, educational attainment, and standard of living.

This index is considered one of the best economic tools available, as it combines all major social and economic indicators that drive economic development. The UN uses the HDI as part of a composite annual package of reports that rank nations while assessing trends and gaps in human development around the globe.

Overview

The Human Development Index (HDI) was created in 1990 by Pakistani economist and diplomat Mahbub ul Haq (1934-1998) after he was appointed special advisor to the administrator of the United Nations Development Programme (UNDP). The UNDP, which was launched in 1966, works to help nations drive, sustain, and understand economic growth that improves the quality of life for all people.

In his UNDP role, Haq set up the Human Development Report Office (HDRO) and assembled a team of economists. This team began producing the HDI. Haq developed this index because he believed the objective of economic development should be creating an environment that allows the population to enjoy long, healthy lives. He felt the HDI would show how each nation’s economic growth policies impacted its population. Haq thought that the HDI would bring about understanding and help shift the focus of economic development programs from a focus on income levels to a focus on how people lived.

Three Key Areas

The HDI focuses on three key areas: life expectancy, educational attainment, and standard of living, measured by per capita income. Haq believed that human development could be measured in terms of one’s longevity, knowledge, and living standard, so he assigned equal weight to each of these measures.

Life Expectancy

Life expectancy, or longevity, refers to the statistical number of years humans in a country are expected to live. This number is an average and can vary widely by region of the world, country, social class, race, and other factors. Over time, developed and developing countries generally see a trend toward a higher life expectancy—a longer-lived population. Increases in life expectancy can be attributed to declines in chronic disease and improvements in medicine and health care.

For example, according to the Centers for Disease Control (CDC), life expectancy in the United States has steadily increased up until 2020, at which time a decrease of 1.8 years was noted. Again, in 2021, a decrease of 0.9 was noted. These two years demonstrated the largest decline since the 1920s. However, in 2022, the expectancy rose 1.1 years for an average of 77.5 years. This is not nearly the highest life expectancy in the world, though. As of 2024, Monaco had the highest life expectancy at 87 years. Countries like Japan, South Korea, French Polynesia, and parts of China, specifically Hong Kong, have consistently remained at the top of the list for average life expectancy.

Educational Attainment

Educational attainment, or average level of knowledge, is the second measure on the HDI. It refers to a population’s expected amount of schooling, or the highest level of education that the population is likely to reach, on average. HDI calculates this number by combining two numbers: adult literacy rates and school enrollment rates at different levels of education (primary, secondary, etc.). These figures are averaged to calculate both mean years of schooling and expected years of schooling. In other words, the index shows the average number of years of education received by people aged 25 and older.

The measure of educational attainment is important due to the strong correlation between levels of schooling and the ability to achieve personal success and make respectable wages. More developed and wealthier nations tend to have higher average rates of educational attainment.

Standard of Living

Standard of living refers to income. Specifically, it is defined as gross national income (GNI) per capita, or the total value of goods and services produced within a country (or its gross domestic product {GDP}), divided by the number of people in that nation. Economists find this indicator especially useful when comparing one country to another because it shows each country's relative economic performance.

Countries Reported

The 2023–2024 HDI (published in early 2024) included 192 countries and one territory. The number of countries and territories analyzed by HDRO has increased over the years as statistics for a nation or territory have been developed and become more readily available.

Other Indexes

The Human Development Report Office (HDRO) has expanded the information it analyzes and evaluates about each country. According to the HDRO, the data it uses in producing the HDI comes from a variety of international public sources and represents the best and most available statistics for those indicators at the time the annual index is prepared. For example, the HDRO might look at information from the Census Bureau, the Internal Revenue Service (IRS), and other government agencies when analyzing the population of the United States.

In addition to the HDI, the HDRO also releases four other indexes as part of its annual report. These are the Inequality-Adjusted Human Development Index (IHDI), the Gender Development Index (GDI), the Gender Inequality Index (GII), and the Multidimensional Poverty Index (MPI).

The IHDI is of special interest because it expands on the information developed in the Human Development Index (HDI). The IHDI takes each country’s average achievements in the areas of health, education, and income and analyzes how these achievements are actually distributed across the population. The results show how much inequality may exist within a nation. By looking at trends over a number of years, economists can also tell if levels of inequality are increasing or decreasing in a nation.

Bibliography

“Country Insights.” Human Development Reports, 13 Mar. 2024, hdr.undp.org/data-center/country-insights#/ranks. Accessed 23 October 2024.

Crossette, Barbara. “Mahbub ul Haq, 64, Analyst And Critic of Global Poverty.” The New York Times, 17 July 1998, https://www.nytimes.com/1998/07/17/world/mahbub-ul-haq-64-analyst-and-critic-of-global-poverty.html. Accessed 23 Oct. 2024.

Dyvik, Einar H. “Life Expectancy by Country 2023.” Statista, 4 July 2024, www.statista.com/statistics/274519/countries-with-the-highest-life-expectancy-worldwide/. Accessed 23 Oct. 2024.

Keenan, M. “Human Development Index (HDI).” Salem Press Encyclopedia, Jan. 2023. EBSCOhost, research.ebsco.com/linkprocessor/plink?id=911f6243-8547-3475-8ccd-3cd468171475. Accessed 23 Oct. 2024.

“Life Expectancy in the U.S. Dropped for the Second Year in a Row in 2021.” CDC, 31 Aug. 2022, www.cdc.gov/nchs/pressroom/nchs‗press‗releases/2022/20220831.htm. Accessed 23 Oct. 2024.