Introduction to Indices of Human Development:: Introduction to Indices of Human Development: USAID Reform Project
Dr. Brijesh C. Purohit
November 2005
Slide2:
Quality of Life
Human Development Index (HDI),
Gender Disparity Index (GDI),
and
Economics of Happiness
Slide3: The well-being or quality of life of a population is an important concern in
economics and political science.
There are many components to well-being.
A large part is standard of living, the amount of money and
access to goods and services that a person has;
these numbers are fairly easily measured.
Others like freedom, happiness, art, environmental health, and innovation
are far harder to measure.
Measuring quality of life : Measuring quality of life quality-adjusted life years(QALYs)
disability-adjusted life years' (DALYs)
A number of groups and agencies around the world have tried to develop ways of assessing quality of life:
The Economist: Quality-of-life index
Vanderford-Riley well being schedule
Physical quality-of-life index
UN Human Development Index
Genuine Progress Indicator
Gross National Happiness
Slide5: The measures often used in the study of health care are
'quality-adjusted life years' (QALYs) and
the related 'disability-adjusted life years' (DALYs);
both equal 1 for each year of full-health life, and less than 1 for various degrees of illness
or disability.
Thus the cost-effectiveness of a treatment can be assessed
by the cost per QALY or DALY it produces;
for example, a cancer treatment which costs $10,000 and on average gives the patient
2 extra years of full health costs $5000 per QALY.
Assessing treatments in this way avoids the much greater problems associated
with putting a monetary value on life, as required in other areas of economics;
saying that a treatment costs $5000 per QALY (i.e. per year of life) does not say or assume anything about the monetary value of a year of life.
Slide6: Quality-adjusted life years, or QALYs, are a measure of the benefit of a medical
intervention.
It is based on the number of years of life that would be added by the intervention.
Each year in perfect healh is assigned the value of 1.0 down to a value of 0 for death.
If the extra years would not be lived in full health, for example if the patient would
lose a limb, or be blind or be confined to a wheelchair, then the extra life-years are
given a value between 0 and 1 to account for this.
QALYs are controversial as the measurement is used to calculate
the allocation of healthcare resources based upon a ratio of cost per QALY.
As a result some people will not receive treatment as it is calculated that the benefit to
their quality of life is not warranted by the cost.
Slide7: Another method of measuring quality of life is by subtracting the "standard of living",
according to the technical definition of the term.
For example, people in rural areas and small towns are generally reluctant to move
to cities, even if it would mean a substantial increase in their standard of living.
One can thus see that the quality of life of living in a rural area is of enough value
to offset a higher standard of living.
Similarly people must be paid more to accept jobs that will lower their quality of life,
night jobs, ones with extensive travel all pay more and the difference in salaries can
also give a measure of the value of quality of life.
THE WORLD IN 2OO5 The Economist Intelligence Unit’s quality-of-life index : THE WORLD IN 2OO5 The Economist Intelligence Unit’s quality-of-life index numerous attempts to construct alternative, non-monetary indices of social and economic wellbeing in a single statistic a variety of different factors that could influence quality of life.
The main problem in all these measures is
selection bias and arbitrariness in the factors that are chosen to assess quality of life
in assigning weights to different indicators (measured
on a comparable and meaningful scale) to come up with
a single synthetic measure.
Life-satisfaction surveys : Life-satisfaction surveys These surveys ask people the simple question of how satisfied
they are with their lives in general.
A typical question is,
“On the whole are you very satisfied, fairly satisfied, not very satisfied, or not at all satisfied with the life you lead?”
Slide10: The survey results have on the whole proved far more reliable and informative
survey results as a starting point,and a means for deriving weights for the various determinants of quality of life across countries
The average scores from comparable life-satisfaction surveys (on a scale of one to ten) can be assembled for 1999 or 2000 for 74 countries.
These scores are then related in a multivariate regression
to various factors that have been shown to be associated
with life satisfaction in many studies.
Slide11: As many as nine factors survive in the final estimated equation (all
except one are statistically significant;
the weakest, gender equality
Together these variables explain more than 80% of the inter-country variation in life-satisfaction scores.
A number of other variables had no impact in this multivariate framework.
These were:
education levels,
rate of real gdp growth and
income inequality
(Gini coeffi cient).
Determinants of quality of life : Determinants of quality of life The Economist Intelligence Unit’s index
1. Material wellbeing
gdp per person
2. Health
Life expectancy at birth, years.
3. Political stability and security
Political stability and security ratings
4. Family life
Divorce rate (per 1,000 population), converted into index
of 1 (lowest divorce rates) to 5 (highest
Determinants of quality of life: Determinants of quality of life 5. Community life
Dummy variable taking value 1 if country has either high
rate of church attendance or trade-union membership; zero
Otherwise
6. Climate and geography
Latitude, to distinguish between warmer and colder climes.
7. Job security
Unemployment rate, %.
8. Political freedom
Average of indices of political and civil liberties. Scale of 1
(completely free) to 7
9. Gender equality
Ratio of average male and female earnings
Slide14: Economist.com Quality-of-life
survey weights weights
Material wellbeing 11.5 18.8
Health 15.0 19.0
Family relations 14.3 11.3
Job security 11.9 7.7
Social &Comm. Activities 10.9 12.2
Political freedom &Sec. 25.3 26.2
Gender equality 11.1 4.7
100.0 100.0
Slide15: Quality of life GDP per person Difference
Score Rank $ (at PPP) Rank in ranks
Ireland 8.333 1 36,790 4 3
Switzerland 8.068 2 33,580 7 5
Norway 8.051 3 39,590 3 0
Luxemborg 8.015 4 54,690 1 -3
Sweden 7.937 5 30,590 19 14
Australia 7.925 6 31,010 14 8
Iceland 7.911 7 33,560 8 1
Italy 7.810 8 27,960 23 15
Denmark 7.796 9 32,490 10 1
Spain 7.727 10 25,370 24 14
Singapore 7.719 11 32,530 9 -2
Finland 7.618 12 29,650 20 8
USA 7.615 13 41,529 2 -11
Canada 7.599 14 34,150 5 -9
N. Zealand 7.436 15 25,110 25 10
Nerlands 7.433 16 30,920 15 -1
Japan 7.392 17 30,750 16 -1
H. Kong 7.347 18 31,660 11 -7
Slide16: Quality of life GDP per person Difference
Score Rank $ (at PPP) Rank in ranks
UAE 5.899 69 18,330 33 -36
Libya 5.849 70 10,060 53 -17
Indonesia 5.814 71 3,840 90 19
S Arabia 5.767 72 11,110 49 -23
India 5.759 73 3,290 96 23
Paraguay 5.756 74 3,600 95 21
Jordan 5.675 75 4,510 83 8
Nicaragua 5.663 76 2,600 99 23
Bangldesh 5.646 77 1,660 105 28
Albania 5.634 78 5,260 78 0
D Republic 5.630 79 6,610 72 -7
Egypt 5.605 80 3,930 88 8
Algeria 5.571 81 5,770 76 -5
Bolivia 5.492 82 3,680 94 12
Tunisia 5.472 83 7,910 64 -19
Serbia 5.428 84 6,079 75 -9
Armenia 5.422 85 3,993 87 2
Azerbaijan 5.377 86 4,628 81 -5
Georgia 5.365 87 3,841 89 2
Iran 5.343 88 7,630 65 -23
Macedonia 5.337 89 7,499 66 -23
Guatemala 5.321 90 4,050 85 -5
Honduras 5.250 91 2,740 98 7
S Africa 5.245 92 10,810 50 -42
Pakistan 5.229 93 2,340 101 8
Slide17: The Vanderford-Riley well-being schedule a measure of well-being
It is objective in the sense that the subjective standard of well-being used in
the schedule is measured objectively.
The schedule is as follows:
Per capita FTE (Full-time equivalents; the number of hours worked per person,
an average of 40 hours per week, constitutes 1.0 FTE)
Value of equity in property per person
Ratio of property owners to non-owners (as defined as no outstanding liens
or balance on property)
Ratio of self-employment to total employment
A more recent development in the schedule has been the inclusion, for the United States,of the US Census' Meeting Basic Needs scale.
The ratio of the population meeting those basic needs defined by the Census is now tracked by the Vanderford-Riley schedule.
Slide18: Physical quality-of-life index(PQLI)
measureof the quality of life or well-being of a country.
The value is a single number derived from
basic literacy rate,
infant mortality,and
life expectancy at age one,
all equally weighted on a 0 to 100 scale.
developed for the Overseas Development Council in 1979 by Morris Davis Morris, as one of a number of measures created due to dissatisfaction with the use of GNP as a indicator of development.
PQLI might be regarded as an improvement
but shares the general problems of measuring quality of life in a quantitative way. It has also been criticized because there is considerable overlap between infant mortality and life expectancy.
Slide19: Human Development Index World map indicating HDI of nation-states, 2005.
The colour generalisation graduates from
green (for high development),
to yellow and orange (for medium development),
to red (for low development).
Slide20: The UN Human Development Index (HDI)
It is a comparative
measure of poverty, literacy, education, life expectancy,
and other factors for countries worldwide.
It is a standard means of measuring well-being, especially child welfare.
The index was developed in 1990 by the Pakistani economist Mahbub ul Haq,
used since 1993 by the United Nations Development Programme in its
annual report.
Slide21: The HDI measures the average achievements in a country
in three basic dimensions of human development:
A long and healthy life, as measured by life expectancy at birth.
Knowledge, as measured by the adult literacy rate (with two-thirds weight) and
the combined primary, secondary and tertiary gross enrollment ratio
(with one-third weight )
A decent standard of living, as measured by gross domestic product (GDP)
per capita at purchasing power parity (PPP) in USD.
Each year, countries are listed and ranked according to these measures.
Slide22:
Method used to calculate the Human Development Index 2005 report
Top thirty countries
Bottom ten countries
Top/bottom three countries by continent
Slide24: CALCULATING THE HUMAN DEVELOPMENT INDICES
Slide35: Number in parentheses indicates change in rank since last report. Top thirty countries
Slide36: 168.Mozambique (↑ 3) 169. Burundi (↑ 4) 170. Ethiopia (=) 171.Central African Republic (↓ 2) 172.Guinea-Bissau (=)
173.Chad (↓ 6)
174.Mali (=)
175. Burkina Faso (=)
176. Sierra Leone (↑ 1)
177. Niger (↓ 1) Bottom ten countries
Slide37: Africa 51.Seychelles (↓ 16) 58.Libya (=) 65. Mauritius (↓ 1) 175. Burkina Faso (=) 176.Sierra Leone (↑ 1) 177. Niger (↓ 1) Top/bottom three countries by continent
Top/bottom three countries by continent : Top/bottom three countries by continent Africa
51. Seychelles (↓ 16) 58. Libya (=) 65. Mauritius (↓ 1) ... 175. Burkina Faso (=) 176. Sierra Leone (↑ 1) 177. Niger (↓ 1)
Top/bottom three countries by continent : Top/bottom three countries by continent Asia
11. Japan (↓ 2) 22. Hong Kong (↑ 1) 23. Israel (↓ 1) ... 139. Bangladesh (↓ 1) 140. East Timor (↑ 18) 151. Yemen (↓ 2)
Top/bottom three countries by continent : Top/bottom three countries by continent Europe
1. Norway (=) 2. Iceland (↑ 5) 4. Luxembourg (↑ 11) ... 100. Georgia (↓ 3) 101. Azerbaijan (↓ 10) 115. Moldova (↓ 2)
Top/bottom three countries by continent : Top/bottom three countries by continent North America
5. Canada (↓ 1) 10. United States (↓ 2) 30. Barbados (↓ 1) ... 116. Honduras (↓ 1) 117. Guatemala (↑ 4) 153. Haiti (=)
Top/bottom three countries by continent : Top/bottom three countries by continent Oceania
3. Australia (=) 19. New Zealand (↓ 1) 54. Tonga (↑ 9) ... 118. Vanuatu (↑ 11) 128. Solomon Islands (↓ 4) 137. Papua New Guinea (↓ 4)
Top/bottom three countries by continent : Top/bottom three countries by continent South America
34. Argentina (=) 37. Chile (↑ 6) 46. Uruguay (=) ... 88. Paraguay (↑ 1) 107. Guyana (↓ 3) 113. Bolivia (↑ 1)
Past top countries : Past top countries 2004 – Norway
2003 – Norway
2002 – Norway
2001 – Norway
2000 – Canada
1999 – Canada
1998 – Canada
1997 – Canada
1996 – Canada
1995 – Norway
1994 – Canada
1993 – Japan
1992 – Canada
1991 – Japan
1990 – Canada
1985 – Canada
1980 – Switzerland
Slide45: Millennium Development Goal
Goals and targets
Goal 1 Eradicate extreme poverty and hunger
Target 1
Halve, between 1990 and 2015, the proportion of people
whose income is less than $1 a day
Target 2
Halve, between 1990 and 2015, the proportion of people
who suffer from hunger
Goal 2 Achieve universal primary education
Target 3
Ensure that, by 2015, children everywhere, boys and girls alike,
will be able to complete a full course of primary schooling
Slide46: Goal 3 Promote gender equality and empower women
Target 4
Eliminate gender disparity in primary and secondary education, preferably by 2005, and to all levels of education no later than 2015
Goal 4 Reduce child mortality
Target 5
Reduce by two thirds, between 1990 and 2015, the under-five mortality rate
Goal 5 Improve maternal health
Target 6
Reduce by three quarters, between 1990 and 2015, the maternal mortality ratio
Goal 6 Combat HIV/AIDS, malaria and other diseases
Target 7
Have halted by 2015 and begun to reverse the spread of HIV/AIDS
Slide47: Target 8
Have halted by 2015 and begun to reverse the incidence
of malaria and other major diseases
Goal 7 Ensure environmental sustainability
Target 9
Integrate the principles of sustainable development into
country policies and programmes and reverse the loss of
environmental resources
Slide48:
Human Development Index for India — Combined
States/UTs
1981
1981
1991
1991
2001
2001
Value
Rank
Value
Rank
Value
Rank
A.Pradesh
0.298
9
0.377
9
0.416
10
Assam
0.272
10
0.348
10
0.386
14
Bihar
0.237
15
0.308
15
0.367
15
Gujarat
0.360
4
0.431
6
0.479
6
Haryana
0.360
5
0.443
5
0.509
5
Karnataka
0.346
6
0.412
7
0.478
7
Kerala
0.500
1
0.591
1
0.638
1
M.Pradesh
0.245
14
0.328
13
0.394
12
Maharashtra
0.363
3
0.452
4
0.523
4
Orissa
0.267
11
0.345
12
0.404
11
Punjab
0.411
2
0.475
2
0.537
2
Rajasthan
0.256
12
0.347
11
0.424
9
Tamil Nadu
0.343
7
0.466
3
0.531
3
Uttar Pradesh
0.255
13
0.314
14
0.388
13
West Bengal
0.305
8
0.404
8
0.472
8
All India
0.302
0.381
0.472
Note The HDI for 2001 has been estimated only for a few selected States for which
some data, including the Census 2001, was available. The assumptions that have been
made for HDI 2001 are indicated in the Technical Appendix.
Slide49: States Grouped According to Selected Indicators
Human Development Index(HDI) Infrastructure Index (II)
Slide54: (Jharkhand)
Slide56: Grants-in-aid for Education Sector (major head 2202)
(Rs. in crore)
State 2005-06 2006-07 2007-08 2008-09 2009-10 2005-10
1 2 3 4 5 6 7
Assam 183.20 200.60 219.66 240.53 263.38 1107.37
Bihar 443.99 486.17 532.36 582.93 638.31 2683.76
Jharkhand 107.82 118.06 129.28 141.56 155.01 651.73
M. P. 76.03 83.25 91.16 99.82 109.30 459.56
Orissa 53.49 58.57 64.13 70.22 76.89 323.30
Rajasthan 20.00 20.00 20.00 20.00 20.00 100.00
U. P. 736.87 806.87 883.52 967.45 1059.36 4454.07
W.B. 64.83 70.99 77.73 85.11 93.20 391.86
Total 1686.23 1844.51 2017.84 2207.62 2415.45 10171.65
Slide57: Grants-in-aid for Health Sector (major head 2210 & 2211)
(Rs. in crore)
State 2005-06 2006-07 2007-08 2008-09 2009-10 2005-10
1 2 3 4 5 6 7
Assam 153.58 171.24 190.93 212.89 237.38 966.02
Bihar 289.30 322.57 359.66 401.02 447.14 1819.69
Jharkhand 57.39 63.99 71.35 79.55 88.70 360.98
MP 28.88 32.20 35.90 40.03 44.63 181.64
Orissa 31.22 34.81 38.81 43.28 48.25 196.37
UP 367.63 409.90 457.04 509.60 568.21 2312.38
UtK 10.00 10.00 10.00 10.00 10.00 50.00
Total 938.00 1044.71 1163.69 1296.37 1444.31 5887.08
Genuine Progress Indicator : Genuine Progress Indicator The Genuine Progress Indicator (GPI)
a concept in green economics and welfare economics that has been suggested as a replacement metric for gross domestic product (GDP) as a metric of economic growth.
it is claimed ..more reliably distinguish uneconomic growth - harmful:
A GPI is an attempt to measure whether or not a country's growth, increased production of goods, and expanding services have actually resulted in the improvement of the welfare (or well-being) of the people in the country.
Accordingly for example, the GPI will be zero if the increases in dollar costs of crime and pollution equal the total dollar rise in production of goods and services, all other factors being constant.
Activists : Activists Scandinavia
Netherlands
France
Germany
Applying the Genuine Progress Indicator to legislative decisions : Applying the Genuine Progress Indicator to legislative decisions The best known attempt to apply a GPI to legislative decisions is probably the GPI Atlantic indicator pioneered by Ronald Colman for Nova Scotia, and
the ecological and social indicators used by the Government of Canada to measure its own progress to achieving well-being goals:
its Environment and Sustainable Development Indicators Initiative (Canada) is a substantial effort to justify state services in GPI terms.
It assigns the Commissioner for the Environment and Sustainable Development (Canada)), an officer in the Auditor-General of Canada's office, to perform the analysis and report to the House of Commons
Slide61: This has not satisfied the stricter advocates of GPI, however:
Canada continues to state its overall budgetary targets in terms of reducing
its debt to GDP ratio, which implies that GDP increase and debt reduction in
some combination are its main priorities.
And not all parties believe that anything less than total commitment
of the A-G's office only to the "genuine" indicators can achieve the goals:
Despite the efforts of local communities to achieve more sustainable development,
Canada lacks a federal Genuine Progress Indicator (GPI),
said Green Party of Canada leader Jim Harris.
“Measuring well being through GPI is
the first step to forming solid solutions to problems facing our communities,” said Harris.
“Indicators such as Gross Domestic Product (GDP) show financial growth
without taking into account harmful activities such as crime and pollution.
A strategy that uses GPI to better reflect our concerns is essential to protecting our
health and overall well being.
Slide62: In the EU the Metropole efforts and the London Health Observatory methods
are equivalents focused mostly on urban lifestyle.
The EU and Canadian efforts are among the most advanced
in any of the G8 or OECD nations,
but there are parallel efforts
to measure quality of life or standard of living in health (not strictly wealth)
terms in all developed nations.
This has also been a recent focus
of the labour movement.
Gross national happiness : Gross national happiness Gross National Happiness (GNH) is an attempt to define a standard of living in more holistic and psychological terms than Gross National Product.
The term was coined by Bhutan's King Jigme Singye Wangchuck in 1972.
It signalled his commitment to building an economy that would serve Bhutan's unique culture based on Buddhist spiritual values.
Like many worthy moral goals it is somewhat easier to state than to achieve, nonetheless, it serves as a unifying vision for the Five Year planning process and all the derived planning documents that guide the economic and development plans to the country.
One of many alternative indicators: One of many alternative indicators
Unlike the Genuine Progress Indicator which actually tries to measure well-being, the GNH does not attempt to quantify happiness.
The two measures agree, however, that well-being is more relevant and important than consumption.
GNH depends on a series of subjective judgements about moral values.
In practice this means that it is open to whoever defines the frame of reference, invariably governments, to define GNH in a way that suits their interests.
Happiness as an Objective : Happiness as an Objective Happiness has organically evolved from
the constituent features of Bhutanese society before 1959, a socio-economic system based on a Buddhist and feudal set of values.
does not contradict the fact that the substance of Gross National Happiness might have changed over time or
might have been supplemented by outside concepts.
The Determinants of Gross National Happiness : The Determinants of Gross National Happiness Yardstick of Bhutanese development has always been emotional well-being
rather than mere economic progress,
influencing and determining factors of the concept.
configuration and the interrelations of the dimensions of Bhutanese development are schematically demonstrated in the figure below.
Conceptual building blocks of GNH arranged in three levels: Conceptual building blocks of GNH arranged in three levels
according to their position in a cause-and-effect hierarchy.
The uppermost level( level of superstructure) contains the ‘input’ components (the influencing and determining factors) for the Bhutanese development concept.
While the conceptual elements (people-centred or human
development, self-reliance, cultural preservation and
environmental preservation) of Gross National Happiness are
a reflection of these determinants,
they constituted at the same time the set of inputs for the operational level of Bhutanese development i. e. the level of policies and projects.
The aim not economic efficiency, but maximization of happiness : The aim not economic efficiency, but maximization of happiness According to GNH concept
objectives of market economics, i.e., increasing consumption and accelerating growth are thus only relevant as means to an entirely different end – human well-being.
Besides, Buddhist moral philosophy provides a definition of happiness that well being be drawn from the harmonization of spiritual and material aspects of life.
Slide70: Hence Buddhism as the single most important determinant
for the Bhutanese value base furnished the core concept for
“Gross National Happiness”,
the perception of human well being as the fundamental objective of economic activity.
This also turns the criticism of western economists, who smile
about the economic inefficiency of «Gross National
Happiness», highly irrational.
They miss the point –
Slide71: The human orientation of development has resulted in
Bhutan’s commitment to the rapid enhancement of the
population’s health and education
Bhutan’s perception
that development ought to be people-centered,
should invest scarce resources in social facilities
(rather than in industrialization or the diversification of the
economy to generate growth)
fostering modern social services,
Thus GNH as a revolution in development thinking.
Slide72: Bhutan’s indigenous conservation ethic provided a major
input for “Gross National Happiness” and was perhaps the
most consistently applied aspect of the concept.
some examples
As early as 1961
the National Assembly resolved that trees in the ground should be
exempted from taxation to discourage felling “in keeping with
the Government’s conservation policy.”
The same rationale led to
legislation such as the Forest Act of 1969
the Land Act of 1979
which contains the peculiar provision that the government owns all trees, including those growing on private land.
Slide73: In 1974
preservation policy was underscored by declaring vast sanctuaries,
parks and forest reserves as protected areas.
Today, protected areas constitute about 26 per cent of Bhutan’s territory.
Elsewhere, Bhutan never exploited its natural resources on
grounds of commercial profitability.
Self-reliance and Paternalism
Bhutan’s traditional socio-economic system
based on the principle of communal self-reliance.
The population lived in scattered villages, hamlets and isolated farms
urban settlements were non-existent.
Slide74: This corresponds to Buddhist doctrine
It points to the benevolent nature of small scale
communities.
Further the topographic constraints and the entire
lack of infrastructure
limited the interaction between the communities settled in the river valleys
of the Inner Himalayas with those in the southern foothills and the
outside world.
In the absence of marketable surpluses trans-Himalayan and
Indo-Bhutanese trade was reduced to a few necessities exchanged by barter.
Slide75: However, among the valley communities
there was vigorous exchange of goods facilitated by
the migration of livestock and people from temperate settlements in summer
to subtropical settlements in winter.
As a result groups of neighboring communities formed self-sufficient units
Due to the lack of foreign influences and the extremely stable social
environment, indigenous institutions and systems of knowledge could evolve.
Particularly in the field of local conflict resolution and the allocation of collective resources
(e.g. rules about irrigation, use of community grazing land etc.) effective customary rules have developed over the centuries.
Slide76: Since then, many policies bear the stamp of the centrality of self-reliance
the gradual shift to decentralization of development decision-making
the reluctance to give up food self-sufficiency in favour of cash crop
avoid dependency on external loans, etc.