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 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.

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.

Fig. 1 - Elementary school in Madagascar

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.

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.

Fig. 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.

Fig. 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.