Download Chapter 2 - eco - LazyBone Publications

CHAPTER 2
QUALITY OF HUMAN LIFE
INDEX
SR.
NO.
PARTICULARS
1
INTRODUCTION
2
P.Q.L.I.
3
ADVANTAGES AND LIMITATIONS OF P.Q.L.I.
4
HUMAN DEVELOPMENT
5
H.D.I.
6
CLASSIFICATION ON BASIS OF H.D.I.
7
LIMITATIONS OF H.D.I.
8
H.D.I. OF INDIA
INTRODUCTION
A country is formed by the people living in it. When it is said that
there is development in the economy, it should obviously mean
that the quality of life of the people in the economy is improving.
Previously, economic development of any country was measured
by gross national product and per capita income. However, other
factors were completely ignored and only monetary or economic
aspect was given extreme importance.
INTRODUCTION
Many economists have been trying to constantly search for a
wider socio-economic yardstick (measure) to measure economic
development in terms of quality of life.
Recently there are two approaches developed by economist to
measure economic development in terms of quality of life:
1. Physical quality of life Index (P.Q.L.I)
2. Human Development Index (H.Q.1)
Physical Quality of Life Index (P.Q.L.I.)
Quality of life refers to overall well-being of people of a country.
It does not depend on economic factors but on socio-political
factors like:
 Environment
 Social security
 National security
 Political freedom
 Overall infrastructure
Physical Quality of Life Index (P.Q.L.I.)
Physical Quality of Life Index (P.Q.L.I) was developed by famous
economist Morris David in 1979 for 23 developed and
developing countries.
Morris David used the following three indicators to prepare a
composite index known as Physical Quality of Life Index:
1. Life Expectant Rate (L.E.I)
2. Infant Mortality Rate (I.M.I)
3. Basic Literacy Rate (B.L.I)
Physical Quality of Life Index (P.Q.L.I.)
1. Life Expectant Rate (L.E.I): Life expectancy means average
number of year a person is expected to live. As per census of
2011, it is 66.8 years in India.
2. Infant Mortality Rate (I.M.I): It refers to the number of
infants dying within one year of their birth out of every 1000
births. As per census report of 2011, it is 47 per 1000. Higher
infant mortality is harmful for economic development.
3. Basic Literacy Rate (B.L.I): Any person above the age of 7
year who can read and write in any one language with an
ability to understand it is considered as literate. As per
census 2011, it is 74.04% in India.
Physical Quality of Life Index (P.Q.L.I.)
For each of the above indicator, the performance of individual
country is rated on a scale of 1 to 100 where 1 represents the
worst performance and 100 represent the best performance.
P.Q.L.I is then constructed by averaging these three indicators
giving equal weight to each of them.
Morris David has given following formula to obtain P.Q.L.I
P.Q.L.I = L.E.I.+ I.M.I.+ B.L.I.
3
Physical Quality of Life Index (P.Q.L.I.)
Example:
Suppose, the L.E.I. for India is rated as 75, the I.M.I is rated as 40
and B.L.I. is rated as 65, then the P.Q.L.I will be 60.
[(75+40+65)/3]
Advantages and limitations of P.Q.L.I.
Advantage of P.Q.L.I :
(Smart Code: AHEAD)
1. Aspect of welfare has
been considered
2. Helps the government for
analysis
3. Easy to compare
4. Also
Considers
Distribution
5. Data required is easily
available
Limitation of P.Q.L.I
(Smart Code : MAN)
1. Many other factors have
been ignored
2. All factors have been
given equal importance
3. Not a proper measure of
economic development
Advantages
1. Aspect of welfare has been considered
The three indicator i.e. life expectancy rate, infant mortality
rate and literacy rate very well represent the welfare of the
people of the country. A country wherein all the three
indicators are good can be said to be a developed economy.
Advantages
2. Helps the government for analysis
P.Q.L.I helps to government to understand the overall welfare
in the economy and how well its welfare policies are being
implemented. This helps the government to take corrective
action.
Advantages
3. Easy to compare
The method followed to measure P.Q.L.I is standard for all
the countries. Therefore, it can be used to make comparison
between countries and this helps the relatively
underdeveloped countries to take corrective measure.
Advantages
4. Also considers distribution
The P.Q.L.I considers the distribution of welfare in the
country. A country cannot have a high average of literacy
rate, life expectancy and low infant mortality rate unless a
large part of the population is covered by the benefits of
economic development.
Advantages
5. Data required is easily available
The data relating to all the three indicators is easily available
in the census report. Therefore, measurement of P.Q.L.I is a
simple.
Limitations
1. Many other factors have been ignored
P.Q.L.I ignores many factors which influence the quality of life
such as employment, housing, justice, social security as well
as human rights.
Limitations
2. All factors have been given equal importance
P.Q.L.I is a simple average of literacy rate, infant mortality
rate and life expectancy rate i.e. all the factors have been
giving equal weightage. However, it is difficult to understand
the rationale behind giving equal importance to all factors.
Limitations
3. Not a proper measure of economic development
P.Q.L.I. does not explain the structural change in the
economy of a country. Moreover, it does not at all consider
economic or monetary concept. Hence, it is a poor measure
of economic development as well as economic growth.
Inspite of these drawbacks, P.Q.L.I. is considered as an
improvement over traditional measure of economic welfare.
However, recently developed Human Development Index
(HDI) is a better and more refined version of PQLI.
Human Development
United Nations Development Programme has defined human
development as a process of enlarging peoples’ choices and their
level of well-being. According to Human Development Report,
the three most important choices of people are:
 To lead a long and healthy life
 To acquire knowledge
 To enjoy a decent standard of living.
Human Development is measured by constructing Human
Development Index (H.D.I)
Human Development
The following is the importance of human development
1. It is an end
2. Helps to control population
3. Increases efficiency
4. Other resources are better utilized
5. The society becomes healthy and safe
6. Conservation of environment
Importance
1. It is an end
Economic growth is the means and human development is
an end. Economic growth enables an economy to improve
human condition and enlarge the choices of the people
which finally lead to their development.
Importance
2. Helps to control population
Human development includes providing better education
facilities. Educated people understand the benefits of having
a small family. Increased medical facilities help to reduce the
infant mortality rate.
Importance
3. Increases efficiency
With human development, there is an improvement in
health, nutrition and education. This helps to increase
efficiency and productivity of labour.
Importance
4. Other resources are better utilized
The utilization of resources highly depends on the efficiency
of the human resource. Since, the efficiency of labour
increases, other resources are also better utilized.
Importance
5. The society becomes healthy and safe
Educated people who are bestowed with proper rights do
not get involved in anti-social activities like riots, terrorism,
robbery etc. Therefore, a safe and healthy society is created.
Importance
6. Conservation of environment
Educated people are aware about the negative effect that
over population, deforestation, heavy industrialization etc.
have on the environment. Therefore, they make an extra
effort to save the environment.
Human development is extremely important and it depends
on much more than just growth of income.
Human Development Index (H.D.I.)
Human Development is measured by constructing Human
Development Index (H.D.I). The Human Development
Index (HDI) is a composite statistic of life expectancy, education,
and income indices used to rank countries. It was created by the
Pakistani economist Mahbub ul Haq and the Indian
economist Amartya Sen in 1990 and was published by the United
Nations Development Programme.
Human Development Index (H.D.I.)
H.D.I. makes it clear that income cannot be considered as a
yardstick for measuring human development because well-being
depends on use of income and not on level of income. For
constructing H.D.I, we have to prepare index number for each of
the three dimensions of human development.
Sr. No
Dimension
Index
1
Long and healthy life dimension
Life Expectancy
Index
2
Knowledge dimension
Education Index
3
Standard of living dimension
GDP per capita
Human Development Index (H.D.I.)
Note: Education index is weighted average of adult literacy rate
as well as the primary, secondary and university enrollment
ratio.
In order to calculate the index, the following formula has been
derived:
Dimension Index = Actual Value – Minimum Value
Maximum Value – Minimum Value
Human Development Index (H.D.I.)
For the purpose of maximum value and minimum value, the
following table has been provided:
Source : Human Development Report 2005.
Indicators
Life expectancy at
birth (years)
Adult literacy rate
(%)
Combined gross
enrollment (%)
GDP per capita (PPP
US $)
Maximum Value
Minimum Value
85
25
100
0
100
0
40,000
0
Human Development Index (H.D.I.)
For e.g. If the actual life expectancy in India is 66 years, then the
life expectancy index will be calculated as follows:
Life Expectancy Index = 66-25 / 85-25
= 41/60
= 0.68
Finally, HDI is calculated by taking an average of three dimension
indices:
H.D.I. = Life Expectancy Index + Educational Index + GDP Index
3
Classification on basis of H.D.I.
According to Human Development Report, 2005, different
countries are classified in to 3 group of the basis of HDI in the
following manner:
Sr. No
Group
Range
Example
1
High HD group
2
Medium HD group
3
Low HD group
0.8 and
above
0.5 to 0.8
Norway, USA, Japan
China, Sri Lanka, India
Less than 0.5 Pakistan, Bangladesh
Limitations of H.D.I.
Human Development is measured by constructing Human
Development Index (H.D.I). The Human Development
Index (HDI) is a composite statistic of life expectancy, education,
and income indices used to rank countries.
The following are the limitation of HDI:
1. Many factors are ignored
2. Problem of inequality is ignored
3. Imperfect Index
4. Arbitrary use of weights
Limitations
1. Many factors have been ignored
Some critics are of view that many indicators of human
development such as infant mortality, nutrition, security are
totally neglected.
Limitations
2. Problem of inequality is ignored
Since HDI is an overall average, it reflects the entire economy
as a whole. HDI of a country neglects the problem of
inequality. It treats all people and all regions at par.
Limitations
3. Imperfect index
According to Prof. Amartya Sen, a Nobel Laureate, the HDI is
an imperfect index which tries to catch complex reality of
human development in one simple number.
Limitations
4. Arbitrary use of weights
The HDI uses weighted average but it does not have any
fruitful impact on measurement. The use of weights is
arbitrary.
Human Development Index of India
 India ranks 136 among 186 countries on its Human
Development Index (HDI) as per the Human Development
Report 2013 published by the United Nations.
 The HDI value of India is 0.647.
 China has been ranked much higher than India.
 The reason for the low ranking is obvious as India compares
poorly with other countries on indicators such as life
expectancy, education and per capita income.
Human Development Index of India
The following are the indicators for India:
1. Life Expectancy – As per the Human Development Report,
2011, the life expectancy in India is 65.8 years (65.77 for
males, and 67.95 year for females). When compared to
European countries, it is very low.
2. Literacy Rate – The literacy rate in India in 2011 was 74.4%
(82.14% for males and 65.45% for females). This is much
lesser than developed nations. Also, average number of a
years spent by a person in school is 10.3 years in India
compared to global average of 15 years.
Human Development Index of India
1. Poverty – There are still 400 million people in India below
the poverty line. A lot of people do not have access to clean
water and proper sanitation facilities.
Human Development Index of India
Over 20 years since the beginning in 1990, HDI value has
increased more than double i.e. from 0.301 to 0.647. We are
currently in the medium HDI group and it will take us a long time
to reach the high HDI group.
Human Development Index Value In India (only for your
reference)
Source – Human Development Index Report 2013.
Year
1990
2002
2010
HDI Value
0.301
0.577
0.647