Human Development Index - HDI

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What is the 'Human Development Index - HDI'

The Human Development Index (HDI) was developed by the United Nations as a metric to assess the social and economic development levels of countries. Four principal areas of examination are used to rank countries: mean years of schooling, expected years of schooling, life expectancy at birth and gross national income per capita. This index makes it possible to follow changes in development levels over time and to compare the development levels of different countries.

BREAKING DOWN 'Human Development Index - HDI'

The HDI was established to place emphasis on individuals, more precisely on their opportunities to realize satisfying work and lives. Evaluating a country's potential for individual human development provides a supplementary metric for evaluating a country's level of development besides considering standard economic growth statistics, such as gross domestic product (GDP). This index can also be used to examine the various policy choices of nations; if, for example, two countries have approximately the same gross national income (GNI) per capita, then it can help to evaluate why they produce widely disparate human development outcomes. One goal of the proponents of the HDI is to stimulate public policy debate.

How is the HDI Measured?

The HDI is essentially a summary measurement of basic achievement levels in fundamental dimensions of human development. The computed HDI of a country is a geometric mean of normalized indexes of each of the life aspects that are examined – knowledge and understanding, a long and healthy life, and an acceptable standard of living.

The health aspect of the HDI is measured by the life expectancy, as calculated at time of birth, in each country. Education is measured on two levels: the mean years of schooling for residents of a country and the expected years of schooling that a child has at the average age for starting school. The metric chosen to represent standard of living is GNI per capita based on purchasing power parity (PPP), a common metric used to reflect average income.

Limitations

The HDI is a simplification and an admittedly limited evaluation of human development. The HDI does not specifically reflect quality of life factors, such as empowerment movements or overall feelings of security. In recognition of these facts, the Human Development Report Office (HDRO) provides additional composite indices to evaluate other life aspects, including inequality issues such as gender disparity or racial inequality. Examination and evaluation of a country's HDI is best done in concert with examining these and other factors, such as the country's rate of economic growth, expansion of employment opportunities and the success of initiatives undertaken to improve the overall quality of life within a country.

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