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Measuring Social and Economic Development A Look at the Human Development Index (HDI) The Human Development Index (HDI) …is the best known composite index of social and economic wellbeing… How the UNDP Measures Human Development • The HDI consists of three equally • • • weighted components: (1) “A long and healthy life” (Health) (2) “Knowledge” (Education) (3) “A decent standard of living” (Wealth) Deconstructing Each Measure • Each component of the HDI is measured • • • • • • in the following way: Health Measured by life expectancy at birth. Education Measured as a combination of adult literacy (with two-thirds weight) and gross enrollment (with one-third weight). Wealth Measured by GDP per capita. Calculating HDI: The United States • • • • • • • Click here to access an calculator. In the United interactive States, in HDI 2005: The average life expectancy was 77.9. The adult literacy rate was 99%. The gross enrollment rate was 93.3%. The GDP per capita was $41,890. The HDI was .951. The HDI ranking was 12th. U.S. HDI = .951 What does it mean that the U.S. ranks 12th in the world with an HDI of .951? The IMF’s GDP Per Capita Rankings (2006) Purchasing Power Parity (PPP) 1 Luxembourg ($80,471) 11 United Kingdom ($35,051) 2 Ireland ($44,087) 12 Finland ($34,819) 3 Norway ($43,574) 13 Belgium ($34,478) 4 5 United States ($43,444) 14 Sweden ($34,409) As you 15 Qatar ($33,049) Iceland ($40,277) 6 Switzerland ($37,369) 16 7 Denmark ($36,549) 17 8 Austria ($36,031) 18 9 Canada ($35,494) 19 10 Netherlands ($35,078) 20 can see here, the United States has the Australia ($32,938) fourth highest GDP per capita Singapore ($32,867) in the world. The question is: Japan ($32,647) how well is the United States Germany ($31,095) using its income to bring Italy ($30,732) about human development? HDI 2014 Very High countries HDI 2014 Low Countries GDP 2104 Top The UNDP’s HDI Rankings (2005) 1 Iceland (.968) 11 Finland (.951) 2 Norway (.968) 12 United States (.951) 3 Australia (961) 13 Spain (.949) 4 Canada (.960)here to 14 access Denmark an (.949) Click interactive 5 6 7 8 graph Ireland (.959)shows 15how Austria (.948) which some countries do better Sweden 16turning United Kingdom (.946) than(.956) others in income into education Switzerland (.955) opportunities 17 Belgium (.946)and therefore into and health Japan (.953) 18 Luxembourg (.944) higher levels of human development. 9 Netherlands (.953) 19 New Zealand (.943) 10 France (.952) 20 Italy (.941) Is the HDI Enough to Measure a Country’s Level of Development? • According to the UNDP, the answer is: • “Not at all.” • “The concept of human development is much broader than what can be captured in the HDI, or any other composite indices…” • “The HDI and the other composite indices can only offer a broad proxy on some of the key the issues of human development…” • “A fuller picture of a country's level of human development requires analysis of other human development indicators and information.” A Sampling of Other Development Indexes The Economist’s “Quality of Life” Index UNICEF’s “Child-Welfare” Index The “Happy Planet” Index The UNDP’s “Human Poverty Index” The UNDP’s “Gender Empowerment Measure” • International Living’s “Quality of Life” Index • The “Global Peace Index” • Freedom House’s “Freedom Rankings” • • • • • Three Issues to Consider When Evaluating Indexes Like the HDI 1) Validity 2) Reliability 3) Parsimony Validity • • • • • What is the index supposed to measure? What indicators make up the index? Are these the best indicators for this index? How are the indicators calculated? Are there better ways to calculate these indicators? • In short, how well does the index actually measure what it is supposed to be measuring? Reliability • Who or what organization collected the data? • How were the data collected? • In short, if you or someone else were to try to replicate the index would you end up with more or less the same results? Parsimony • The whole point of an index is to simplify the measurement of a particular phenomenon. • In short, does the index rely upon as few indicators as reasonably possible without undermining its validity?