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Human Development Index
February 19, 2015
Three factors of Development
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Economic
Social
Demographic
HDI
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HDI: Human Development Index, created by
the United Nations, is a reflection of those
three factors
The UN selects one economic factor, two
social factors, and one demographic factor to
compute the HDI
The highest HDI possible is 1.0, or 100%
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Norway: 0.955, Australia: 0.938, US: 0.937,
Netherlands: 0.921, Germany: 0.92
Economic Factors
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The United Nations using gross domestic
product per capita as the economic factor
for calculating HDI
Other economic factors are considered:
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Types of jobs
Productivity
Raw Materials
Consumer Goods
GDP Per Capita
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Individuals in MDC (More Developed
Countries) typically earn more income than in
(Lesser Developed Countries)
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Per capita income is difficult to calculate in LDCs
GDP is the value of the total output of goods and
services produced within a country, normally
during a year
Geographers use GDP per capita instead
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GDP divided by total population
Types of Jobs
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Jobs typically fall into three categories:
primary, secondary, and tertiary
In an LDC, sometimes 75% of workers are in
a primary sector, compared to 5% in an MDC
In an MDC, jobs have decreased in primary
and secondary sectors, and increased in
tertiary
Productivity
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Workers in an MDC are more productive
than workers in an LDC
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Productivity: the value of a particular product
compared to the labor used to make it
Machinery can help increase productivity
Raw Materials
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Development requires access to raw materials
and energy sources
LDCs that have petroleum are able to advance
more quickly than those that do not
Not all developed countries have raw materials
(ex: Japan)
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Developed through world trade and technology
Consumer Goods
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Wealth can be divided between necessities
(clothing, shelter, and food) and luxuries
(television, cars, technology)
The type of goods and services purchased
by consumers is another indicator of
economic development
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How important is the car? Telephone?
Television?
Social Indicators
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The United Nations uses literacy rate and
Gross Enrollment Rate as the social
factors for calculating HDI.
MDCs use their wealth to provide schools,
hospitals, and welfare services
Social factors include:
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Education and literacy
Health and welfare
Education and Literacy
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The higher the level of development, the
greater are both the quantity and quality of
education
The quality of education is measured in the
student/teacher ratio and the literacy rate
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Literacy Rate: the percentage of a country’s
people that can read and write
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Typically 95% in MDC, and less than 33% in LDC
Health and Welfare
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People are healthier in MDCs
Most developed states have socialized
healthcare
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United States is only major developed country
where health care is privatized
MDCs also offer welfare assistance to help
those unable to work
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Denmark, Norway, and Sweden provide the most
welfare assistance
Demographic Indicators
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The United Nations uses life expectancy
as the demographic indicator for HDI.
Demographic indicators include:
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Life Expectancy
Infant Mortality Rate
Natural Increase Rate
Crude Birth Rate
Life Expectancy
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Better health and welfare cause people in
MDCs to live longer
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Life expectancy: the average number of years a
newborn can expect to live at current mortality
levels
Babies are expected to live to their mid-40s in
LDCs, and mid-70s in MDCs
MDCs have large number of elderly people,
and LDCs have large number of children
Infant Mortality Rate
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Infant Mortality Rate: The annual number of
deaths or infants under one year of age,
compared to the number of live births
More babies survive infancy in an MDC
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90% of infants survive in an LDC
99% of infants survive in an MDC
Natural Increase Rate
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NIR: the percentage by which a population
grows in a year.
It is computed by subtracting the CBR-CDR
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The NIR is about 2% in LDCs, and 1% in MDCs
Crude Birth Rate
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Crude Birth Rate: the total number of live
births in a year for every 1,000 people alive
in the society
LDCs have higher NIRs, because they have
higher CBRs
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The CBR in an LDC is 40 per 1,000
The CBR in an MDC is 15 per 1,000
Calculating the HDI
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Kuwait:
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life expectancy at birth
77.1 years (LE)
the adult literacy rate is
93.3% (LR)
the education enrollment
ratio is 73% (EE)
and the gross domestic
product per capita is
$19,384. (GDP)
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Brazil:
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the life expectancy at
birth is 70.8 years
the adult literacy rate is
88.6%
the education enrollment
ratio is 86%
and the gross domestic
product per capita is
$8,195
Question
1. Before making any calculations, how do you
think these two countries will compare if we
use these measures to come up with a single
HDI for each country?
Educational Percentage
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To calculate the HDI, first
combine the two measures of
education using a weighted
average, with a two-thirds weight
for the adult literacy rate (ALR)
and a one-third weight for the
education enrollment ratio
(EER). The formula for the
weighted average to give the
education percentage (EP) as a
measure of education is
Educational Percentage
HDI calculations
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To calculate a single numerical measure of
human development, the HDI, we want to
combine the measure of health, which is in
years, with the measure of education we just
found, which is given as a percentage, with
the measure of economic well-being, which
is given in U.S. dollars.
Question
3. Explain why we cannot combine these
values directly with different units (like years,
percent, and dollars) into a single measure.
Life Expectancy
To convert life expectancy
values to a life expectancy
index number, we first
identify a reasonable
minimum and maximum for
each of these values. The
United Nations uses 25 as
the minimum and 85 as the
maximum. Then the life
expectancy value (LEV) is
converted to a life
expectancy index (LEI)
using the equation
Question
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4. Explain why an index number defined this
way will be between 0 and 1 and will not
have any units (like years) associated with it.
Life Expectancy Index
Educational Index
The education percentage (the
weighted average of the
adult literacy rate and
the education enrollment
ratio you computed in
question 1) is converted to
an index value by using a
minimum of 0 (percent) and
a maximum of 100 (percent).
This gives the education
index (EI) in terms
of the education
percentage (EP) as
Educational Percentage
Calculating the HDI
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For the final conversion to an
index value, we convert the
gross domestic product per
capita in US$ (GDP) to an
index value. This is done a bit
differently than the previous
conversions. Here base-ten
logarithms are used so that the
effect of a larger GDP value is
diminished. (Natural logs may
be used as well.) The minimum
and maximum values used by
the United Nations for the GDP
are 100 and 40,000,
respectively, and the equation
to calculate the GDP index
value (GDPI)
GDP Index
Final HDI Index
Final Reflection