The Human Development Index (HDI) is a composite statistical measure that evaluates countries based on three key dimensions: life expectancy, education (measured by mean years of schooling and expected years of schooling), and per capita income. It categorizes nations into four tiers of human development, with higher HDI scores reflecting longer lifespans, better education levels, and greater gross national income (GNI) per capita at purchasing power parity (PPP). Developed by Pakistani economist Mahbub ul-Haq, the HDI has been widely adopted by the United Nations Development Programme (UNDP) as a tool for assessing national development in its Human Development Reports.
In 2010, the Human Development Report introduced the Inequality-Adjusted Human Development Index (IHDI), which adjusts the HDI to account for inequalities in health, education, and income. While the standard HDI remains a useful measure of potential human development, the IHDI reflects the actual level of human development by factoring in disparities. The HDI can thus be seen as an indicator of the maximum achievable development in the absence of inequality.
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Origin
The HDI is rooted in the human development approach pioneered by Mahbub ul-Haq, which draws on Amartya Sen’s work on human capabilities. This framework emphasizes the importance of individuals’ ability to “be” and “do” what they value in life. For example, “being” well-nourished, housed, and healthy, and “doing” activities such as working, pursuing education, voting, or engaging in community life. Central to this approach is the concept of freedom of choice. For instance, someone choosing to fast for religious reasons is distinct from someone who is hungry due to poverty or famine.
However, the HDI does not account for certain factors, such as net wealth per capita or the relative quality of goods and services within a country. This omission can result in lower rankings for some highly developed nations, including members of the G7 and other advanced economies. Despite these limitations, the HDI remains a widely recognized tool for assessing and comparing human development across countries.
New HDI Calculation Method (2010 Onwards)
Published on November 4, 2010 (with updates on June 10, 2011), the 2010 Human Development Report introduced a revised method for calculating the Human Development Index (HDI). This new approach combines three key dimensions:
- A long and healthy life: Measured by life expectancy at birth.
- Education: Assessed through mean years of schooling and expected years of schooling.
- A decent standard of living: Evaluated using gross national income (GNI) per capita (PPP international dollars).
Calculation Methodology
In 2010, the United Nations Development Programme (UNDP) adopted a new formula for the HDI, which incorporates the following three indices:
1. Life Expectancy Index (LEI):
- LEI = 1 when life expectancy at birth is 85 years.
- LEI = 0 when life expectancy at birth is 20 years.
2. Education Index (EI):
Mean Years of Schooling Index (MYSI):
(15 years is the projected maximum for this indicator by 2025.)
Expected Years of Schooling Index (EYSI):
(18 years corresponds to achieving a master’s degree in most countries.)
3. Income Index (II):
- II = 1 when GNI per capita is $75,000.
- II = 0 when GNI per capita is $100.
Final HDI Calculation
The HDI is determined by calculating the geometric mean of the three normalized indices:
Key Variables:
- LE: Life expectancy at birth
- MYS: Mean years of schooling (years a person aged 25+ has spent in formal education)
- EYS: Expected years of schooling (total anticipated years of schooling for children under 18)
- GNIpc: Gross national income per capita (PPP-adjusted)
This revised method provides a more comprehensive and accurate measure of human development by incorporating a geometric mean, reducing the impact of extreme values and ensuring a balanced representation of the three dimensions.
HDI Rankings
Northern European countries dominate the highest rankings on the Human Development Index (HDI), while the lowest-scoring nations are predominantly located in Africa. Below are the top 25 countries in the 2023/2024 HDI rankings, along with their respective scores.
Top 25 HDI Rankings
| Rank | Country | HDI Score |
|---|---|---|
| 1 | Switzerland | 0.967 |
| 2 | Norway | 0.966 |
| 3 | Iceland | 0.959 |
| 4 | Hong Kong | 0.956 |
| 5 (Tied) | Denmark | 0.952 |
| 5 (Tied) | Sweden | 0.952 |
| 7 (Tied) | Germany | 0.950 |
| 7 (Tied) | Ireland | 0.950 |
| 9 | Singapore | 0.949 |
| 10 (Tied) | Australia | 0.946 |
| 10 (Tied) | Netherlands | 0.946 |
| 12 (Tied) | Belgium | 0.942 |
| 12 (Tied) | Finland | 0.942 |
| 12 (Tied) | Liechtenstein | 0.942 |
| 15 | United Kingdom | 0.940 |
| 16 | New Zealand | 0.939 |
| 17 | United Arab Emirates | 0.937 |
| 18 | Canada | 0.935 |
| 19 | South Korea | 0.929 |
| 20 (Tied) | Luxembourg | 0.927 |
| 20 (Tied) | United States | 0.927 |
| 22 (Tied) | Austria | 0.926 |
| 22 (Tied) | Slovenia | 0.926 |
| 24 | Japan | 0.920 |
| 25 (Tied) | Israel | 0.915 |
| 25 (Tied) | Malta | 0.915 |
At the other end of the spectrum, the bottom five countries in the HDI rankings are as follows:
Bottom 5 HDI Rankings
| Rank | Country | HDI Score |
|---|---|---|
| 193 | Somalia | 0.380 |
| 192 | South Sudan | 0.381 |
| 191 | Central African Republic | 0.387 |
| 189 (Tied) | Niger | 0.394 |
| 189 (Tied) | Chad | 0.394 |
| 188 | Mali | 0.410 |
These rankings highlight the stark disparities in human development across the globe, with Northern European nations consistently achieving high scores, while several African countries face significant challenges in improving their HDI outcomes.
Limitations of the Human Development Index (HDI)
The Human Development Index (HDI) has been subject to various criticisms, primarily for its simplicity and inherent limitations in evaluating human development. While it serves as a broad indicator, it does not fully capture key aspects of quality of life, such as empowerment, social justice, or overall security.
Recognizing these limitations, the U.N. Human Development Report Office (HDRO) has introduced additional composite indices to address factors like gender inequality, racial disparities, and economic inequities. These supplementary measures provide a more nuanced perspective on human well-being.
Redundancy and Correlation with Income Measures
Many economists argue that the HDI is redundant due to the high correlation between its components—life expectancy, education, and income per capita—and simpler economic measures like Gross National Income (GNI) per capita or even Gross Domestic Product (GDP) per capita.
Empirical evidence suggests that GNI per capita is strongly correlated with both the HDI and its subcomponents in terms of values and rankings. Given this strong relationship, some critics argue that comparing per-capita income across countries would be a more straightforward and resource-efficient approach, rather than investing in data collection for additional indicators that may not provide significantly new insights.
Issues with Composite Index Design
A core principle of composite index design is to avoid including multiple indicators that are highly correlated, as they may represent the same underlying phenomenon. Redundant variables can lead to double counting and introduce potential errors in the data.
In the case of the HDI, higher average income levels often correlate with greater investment in education and improved healthcare outcomes, suggesting that income alone might be a sufficient indicator of human development. Additionally, definitions and measurement methodologies for schooling years and life expectancy vary across countries, which can further affect the reliability and comparability of the HDI.
While the HDI remains a widely used measure, it is best interpreted alongside other indicators, such as economic growth, employment expansion, and the effectiveness of policies aimed at improving overall well-being.
Key Highlights of the Human Development Index (HDI) 2023-24
The 2023-24 Human Development Report, released by the United Nations Development Programme (UNDP), provides a comprehensive assessment of global human development trends. The report highlights significant disparities in development levels, the impact of global inequalities, and the progress made by individual countries, including India. Below are the key highlights and insights from the report.
Top and Bottom Performers
- Top Three Countries:
- Switzerland (0.967), Norway (0.966), and Iceland (0.959) lead the global HDI rankings, reflecting their high levels of life expectancy, education, and income.
- Bottom Three Countries:
- Somalia (0.380), South Sudan (0.381), and the Central African Republic (0.387) occupy the lowest ranks, underscoring the challenges faced by the world’s poorest nations.
- Bigger Economies:
- The United States (0.927), the United Kingdom (0.889), Japan (0.878), and Russia (0.821) feature prominently, though their rankings vary based on their development indicators.
- Countries Not Ranked:
- North Korea and Monaco are among the nations not included in the index due to insufficient data.
Unprecedented Levels of Growth Disparity
The report highlights a growing divide between rich and poor nations:
- Wealthy countries have achieved unprecedented levels of development, while half of the world’s poorest nations remain below their pre-Covid-19 crisis levels.
- The two-decade trend of reducing inequalities between wealthy and poor nations has reversed, with the gap widening significantly.
- Although global HDI is projected to reach record highs in 2023 after declines in 2020 and 2021, the contrast between developed and developing nations remains stark.
Democracy Paradox
The report identifies an emerging “democracy paradox”:
- While most people surveyed express support for democracy, many also endorse leaders who may undermine democratic principles.
- This paradox, coupled with feelings of powerlessness and a lack of control over government decisions, has fueled political polarization and inward-looking policy approaches.
Global Inequalities and Widening Human Development Gap
Global inequalities have been exacerbated by economic concentration:
- Nearly 40% of global trade in goods is concentrated in three or fewer countries.
- In 2021, the market capitalization of each of the world’s three largest tech companies surpassed the GDP of more than 90% of countries.
Indian Overview
India’s performance in the 2023-24 HDI report reflects significant progress, though challenges remain:
- HDI Score and Ranking:
- India achieved an HDI score of 0.644 in 2022, placing it at 134 out of 193 countries.
- This categorizes India under the ‘medium human development’ category.
- Compared to its 1990 HDI score of 0.434, India has shown a 48.4% improvement.
- Key Indicators:
- Life Expectancy: Increased to 67.7 years in 2022, up from 62.7 years the previous year.
- GNI per Capita: Surged to USD 6,951, marking a 6.3% increase over 12 months.
- Education: Expected years of schooling rose to 12.6 per individual.
- Notable Achievements:
- A 9.1-year increase in life expectancy at birth.
- A 4.6-year rise in expected years of schooling and a 3.8-year increase in mean years of schooling.
- Progress in reducing gender inequality, with a Gender Inequality Index (GII) score of 0.437, surpassing the global average. India ranks 108 out of 166 nations on the GII 2022.
Performance of India’s Neighbours
India’s neighbours show varied levels of human development:
- High Human Development:
- Sri Lanka (78) and China (75) are ranked significantly higher than India.
- Medium Human Development:
- Bhutan (125) and Bangladesh (129) are ranked above India, while Nepal (146) and Pakistan (164) are ranked lower.
Conclusion
The 2023-24 Human Development Report underscores the persistent disparities in global development, with wealthy nations continuing to outpace poorer ones. While India has made notable progress in improving life expectancy, education, and income levels, it remains in the ‘medium human development’ category, lagging behind several of its neighbours. The report calls for addressing global inequalities, strengthening democratic institutions, and fostering inclusive growth to ensure sustainable human development for all.