This annual classification makes it possible, on the one hand, to follow the development of a country over time and, on the other, to compare its situation with that of other countries. In this way, governments can better understand their growth options and international aid can be allocated judiciously.
This composite index takes into account health, education and economic factors in order to measure a country's human development, as opposed to previous methodologies that were focused purely on economics.
Next, we review the variables that the HDI measures:. It is evaluated through life expectancy at birth. This measures the longevity of the population from a minimum age of 20 and a maximum age of It refers to the educational level of society and measures, on the one hand, the average years of schooling of adults and, on the other hand, the school life expectancy of children.
The wealth of a country is defined by the annual Gross National Income GNI per capita for a minimum of dollars PPP purchasing power parity and a maximum of 75, dollars. The HDI is the geometric mean of the three dimensions above, with indices calculated separately for each country using data on life expectancy, schooling and per capita income. The final result always gives a value between 0 and 1 which defines, according to the UNDP, the four degrees of human development detailed below:.
Countries which lie below or closer to the grey line which indicates equal parity between these measures , have achieved improvements in these measures of development health and education with lower levels of GDP per capita relative to countries further from the line.
Overall, there is a strong correlation between the HDI measured with and without GDP per capita as an additional metric. The Human Development Index HDI provides a single index measure to capture three key dimensions of human development: a long and healthy life, access to knowledge and a decent standard of living. Values of each of the four metrics are first normalized to an index value of 0 to 1.
With the actual value for a given country, and the global maximum and minimum, the dimension indices value for each metric is calculated as:. The dimension index is therefore 1 in a country that achieves the maximum value and it is 0 for a country that is at the minimum value. Once each of the individual indices have been calculated, they are aggregated to calculate the HDI.
The HDI is calculated as the geometric mean equally-weighted of life expectancy, education, and GNI per capita, as follows:. The education dimension is the arithmetic mean of the two education indices mean years of schooling and expected years of schooling. It provides an indexed measure across the same three dimensions: a long and healthy life, access to knowledge and a decent standard of living.
They are:. The index for each dimension ranges between 0 and 1. However, if we look at changes through time, we see that although HIHD values are typically lower, they can change much more quickly since indices are derived non-linearly on a logarithmic scaling.
The three key dimensions are: 1 — A long and healthy life — measured by life expectancy. On all aspects Our World in Data offers research and data in dedicated entries: Here is the Our World in Data entry on life expectancy. Mean male height. The HDI can also be used to question national policy choices, asking how two countries with the same level of GNI per capita can end up with different human development outcomes.
These contrasts can stimulate debate about government policy priorities. The Human Development Index HDI is a summary measure of average achievement in key dimensions of human development: a long and healthy life, being knowledgeable and have a decent standard of living.
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Your Practice. Popular Courses. Part Of. Elements of Inequality. Role of the Financial System. Legal Protections. Measuring Inequality. Theories Explaining Inequality. Models to Reduce Inequalilty. Economics Behavioral Economics. Key Takeaways The HDI is a measurement system used by the United Nations to evaluate the level of individual human development in each country. The HDI uses components such as average annual income and educational expectations to rank and compare countries.
The HDI has been criticized by social advocates for not representing a broad enough measure of quality of life and by economists for providing little additional useful information beyond simpler measures of the economic standard of living. Article Sources. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts.
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