Human Development Index

Where a person is born and raised has an outsize impact on what their life will look like. A person born in a wealthy Canadian city is likelier to live longer, be more affluent, and be more educated than someone born in a poor town in South Sudan. Combatting this fundamental inequality in the world has been the goal of aid organizations, governments, and the United Nations for decades. The best tool we have for measuring this inequality is called the Human Development Index or HDI. Today, let’s dive into what HDI is, its significance, and how it is used.

Human Development Index Human Development Index

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Table of contents

    Human Development Index Definition

    The Human Development Index is a statistic used to measure the human development of a country, combining several indicators of health, education, and wealth. Because HDI doesn’t count just one thing, it’s known as a composite index.

    But what exactly is human development? Human development is the process by which a person can grow to meet their full potential and improve their well-being. This includes access to quality healthcare, affordable education, and economic mobility. For means of practicality and accessibility of data, HDI can’t measure every single thing that might impact someone’s life but instead focuses on a few highly influential factors.

    HDI was developed by Pakistani economist Mahbub ul Haq and the first HDI report was published in 1990.

    Human Development Index: A formula used to measure factors of human development including health, wealth, and education.

    Next, let’s review the indicators that comprise the HDI.

    Human Development Index Indicators

    HDI is calculated using a formula combining the Life Expectancy Index, Education Index, and Income Index. The resulting HDI number ends up between 0 and 1, with 0 being the least human development and 1 the most.

    Life Expectancy

    How long we are expected to live at birth is controlled by a huge array of factors. Healthcare access, nutrition, conflict, and much more all shape our physical well-being. A country’s average life expectancy is a good approximation of the overall health conditions in a country, and a core component of the Human Development Index. Currently, the worldwide average life expectancy is about 67 years, with the lowest being Eswatini at 49 and the highest Japan at 83. Since life expectancy is an average, it doesn’t mean that a 40-year-old in Eswatini should expect only 9 more years of life, but because infant mortality is so high, the average life expectancy is brought down significantly.

    Education

    Schooling is a huge part of growing up, and the fundamentals of learning how to read and write allow us to be productive and achieve our full potential. Beyond primary education, going to college or receiving vocational education is fundamental to making a country’s economy advanced and diverse. In terms of human development, education grants people the ability for greater flexibility and choice in life and can secure one's financial future.

    Human Development Index Elementary School Madagascar StudySmarterFig. 1 - Elementary school in Madagascar

    The Human Development Index uses the Education Index to analyze the educational attainment of a particular country. The Education Index looks at how many years of school a person is expected to attend as well as the average number of years of school people actually attend in the country.

    Gross National Income Per Capita

    The purpose of including gross national income (GNI) per capita is to get a good understanding of the standard of living of a country. GNI per capita is calculated by taking the total amount of money earned by a country’s citizens and dividing that by the population. It’s no secret that money is essential to nearly everything humans need, so an understanding of how much money the average person has is key to projecting their human development.

    You should review the article on GDP, GNP, and GNI Per Capita to get a more in-depth understanding of these different metrics and how they are used in the world today.

    Human Development Index Importance

    HDI plays a significant role in how governments and organizations worldwide understand the ways in which places are developing. Read on to learn more about HDI's importance.

    Aid Evaluation and Social Progress

    By getting a good idea of a country’s socio-economic status, aid organizations have a better understanding of what countries require aid. An organization like UNICEF, which provides health and developmental assistance to children, uses HDI to see what nations should receive the most help. Though countries with high HDI may have a need to help the worst-off members of their own society, it doesn’t make sense from an international aid standpoint to be providing something like food aid to those countries. Tracking how HDI changes over time is also crucial to understanding whether aid and development campaigns are making progress. In short, HDI is an indispensable tool for understanding where in the world assistance is needed and whether or not improvements are being made.

    More Holistic Index

    Oftentimes when looking at how “developed” a country is, simply its gross domestic product or GDP is used in that evaluation. While GDP can be enlightening, it’s also limited by not accurately measuring so much more that goes into a country’s overall development. Crucially, many economic indicators don’t accurately account for education and health, something which lessens the potentially positive human development impacts of high economic output. Because HDI is a composite of the three indicators we discussed, it provides a better overall picture of a country’s development achievements than any of the metrics by themselves.

    Human Development Index Limitations

    HDI is not a perfect tool and has some drawbacks.

    Inequality

    Economic inequality occurs when a country’s wealth is distributed unevenly among the population. A large gap between the poorest and wealthiest people in a nation can mean there are a privileged few living well and a large underclass that is struggling. In terms of human development, even if a nation seems wealthy on paper, if most of that money is going to a few people then the benefits aren’t being shared throughout society.

    Inequality is not just limited to money, with health and education also impacted. If good quality schools and healthcare are only supplied to a privileged class, then the rest suffer.

    Human Development Index Mumbai slums next to skyscrapers StudySmarterFig. 2 - Impoverished neighborhood abuts modern skyscrapers in Mumbai, India

    This flaw in the Human Development Index brought about the creation of the Inequality-Adjusted Human Development Index (IHDI). When using this technique, countries with relatively high scores like South Africa suffer a large drop in their human development compared to standard HDI. This is because a highly successful upper-class can bring the averages of health, wealth, and education up even though there a vast majority has extremely low development levels.

    Oversimplification

    Because there are only three metrics that play into the Human Development Index, it glosses over a plethora of other factors that can impact human development. For example, environmental conditions, personal liberties, and crime are big factors in how a person develops. Other indices like the Social Progress Index have attempted to make up for this shortcoming by adding dozens more indicators.

    Also, HDI is an average for a country; it doesn’t mean that everyone lives that way. A country like the United States has one of the highest HDI scores in the world, but still has high percentage living in poverty.

    Human Development Index Ranking

    An organization called the United Nations Development Programme (UNDP) originally came up with the HDI and is still considered the definitive source of the index, publishing 191 countries’ scores every year.

    Human Development Index Countries HDI ranking map StudySmarterFig. 3 - HDI rankings map as of 2021

    The UNDP then places the country into one of four HDI categories: very high, high, medium, and low. Very high is classified as greater than or equal to .800, high is .700-.799, medium .550-.699, and low is less than .550. As of the 2021 UNDP reporting, the country with the highest HDI is Switzerland at .962, and the lowest is South Sudan at .395.

    Human Development Index Example

    Though still home to some of the countries with the lowest HDI rankings in the world, sub-Saharan African nations have seen the highest rates of HDI growth in the world over the past two decades. Efforts by aid organizations and booming economies have led to the consistent growth in HDI, and by extension, the living conditions of the people in the region.

    On the other hand, nations beset by war like Syria and Yemen have seen their HDI scores plummet as the conflicts drag on. The mass destruction caused by war is perhaps the most powerful mover of HDI scores. Investments in education, infrastructure, healthcare, and economic growth can take years to provide tangible benefits, but war is able to wipe them out in no time.

    Human Development Index (HDI) - Key takeaways

    • The Human Development Index measures health, wealth, and education to analyze a country’s development.
    • HDI is important to get a more holistic view of a country’s development and is crucial to determining where aid is needed and what progress nations are making in human development.
    • HDI is limited by not accounting for inequality amongst a population and being a more simple metric compared to other indices.

    References

    1. Fig. 1 Elementary school in Madagascar (https://commons.wikimedia.org/wiki/File:Diego_Suarez_Antsiranana_urban_public_primary_school_(EPP)_Madagascar.jpg) by Lemurbaby (https://en.wikipedia.org/wiki/User_talk:Lemurbaby) is licensed by CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0/deed.en)
    2. Fig. 2 Slums and skyscrapers in Mumbai (https://commons.wikimedia.org/wiki/File:MUMBAI_DISPARITY_OF_LIVING.jpg) by Surajnagre (https://commons.wikimedia.org/w/index.php?title=User:Surajnagre&action=edit&redlink=1) is licensed by CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0/deed.en)
    3. Fig. 3 HDI map (https://commons.wikimedia.org/wiki/File:Countries_by_HDI.png) by Flappy Pigeon (https://commons.wikimedia.org/wiki/User:Flappy_Pigeon) is licensed by CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0/deed.en)
    Frequently Asked Questions about Human Development Index

    What is the human development index?

    The Human Development Index is a composite index meant to measure several factors that impact human development. It consists of a number between 0 and 1 and ranks 191 nations in the world according to their score.

    When was the human development index created? 

    The Human Development index was created in 1990, building upon previous work by Pakistani economist Mahbub ul Haq. Since 1990, the HDI has been published each year by the UN Development Programme.

    What does the human development index measure? 

    HDI measures three things:


    1. Health in the form of average life expectancy at birth

    2. Education in terms of expected years of schooling and actual years of schooling on average

    3. Economic output in terms of Gross National Product (GNI) per capita


    How is the human development index calculated? 

    The HDI is calculated using a formula that combines the three measurements of life expectancy, GNI per capita, and the Education Index and creates a score between 0 and 1. Most countries today fall in the range of .400 to .950.

    Why is the Human Development Index important? 

    The importance of the Human Development Index is twofold. First, because it measures three things that impact human development, it’s more useful than any of the three metrics by themselves. Second, this makes HDI a simple yet powerful tool for governments and aid organizations to evaluate where help is needed and if their efforts to improve human development conditions are making progress.

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