World Development Indicators 2011


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A Simple Measure of Human Development: The Human Life Indicator

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Showing results from 1 to 50 of World Development Indicators was updated on September 19, Health Nutrition and Population Statistics was updated on September 19, Jobs was updated on September 19, Population estimates and projections was updated on September 19, This indicator is a derived from the following indicators: a Domestic market size index b Foreign market size index. Unfortunately, downward mobility is much higher in India.

One problem is that while social spending for safety nets for the poor is meagre, a lot of subsidies, such as on cooking gas or on fertilisers benefit the rich the most. We also have a preference for billionaires—the report says India is an outlier in the ratio of billionaire wealth to GDP among economies at a similar level of development. A combination of high growth and social security programmes by both central and state governments led to poverty coming down from But the World Bank report says that, as the poverty headcount becomes lower, the impact of economic growth on poverty comes down.

This is simply because the number of people clustered around the poverty line reduces. In other words, lowering poverty further would call for greater effort. But then, as pointed out earlier, many countries with lower per capita income have done much better in removing poverty. Nevertheless, some limitations of the HDI remain. One important limitation of the HDI arises because of the high level of measurement error in each one of its components see, for example, Castles Wolff, Chong, and Auffhammer conclude that when ranking countries by HDI, 34 percent of them are misclassified due to data errors.

It is not surprising that GNI per capita has the highest measurement error. Because of technical considerations, GNI per capita must be calculated for all countries at the same time. Because the collection of comparable prices for nearly countries is costly and the methodology of combining all those data is complex and based on many subjective assumptions, the computation of GNI per capita is done only periodically. The previous round was based on prices.

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Between benchmark years GNI per capita is extrapolated. When the data were released it was found that the data extrapolated from the benchmark differed significantly from what was observed based on the benchmark. Deaton and Aten argue that some of that difference was due to methodological errors in the benchmark data.

Any random variability or methodological errors in the benchmark data then are propagated through extrapolation until the next benchmarks are released. GNI per capita based on the methodology assessed incomes across the world's countries as being considerably more equal than when those figures were computed based on the methodology.

During the past decade, the details of how the HDI is computed have frequently changed. These changes ultimately reflect the lack of consensus on the relative importance of the factors influencing human development. For example, it is not clear whether in calculating human development, the geometric or arithmetic average of the mean and expected years of schooling should be used.


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  • This lack of consensus suggests the possibility that the methodology of the HDI will continue to be contested and that changes will continue to be made. A historical series of HDIs can be produced holding the functional form of the HDI fixed as well as the goalpost values. However, different historical series result each time the functional form of the HDI or the goalposts are changed. Historical series of HDI values depend on historical series of GNI per capita, and it is not clear how well those data reflect the growth of real GNI per capita using local currency prices.

    The value of one life year gained in terms of GNI per capita varies across countries and years according to the different formulas for the HDI. The value of one additional year of life is the reduction in per capita income required to keep the HDI constant when life expectancy at birth is increased by one year.

    All HDI countries. HDI formulas used in , , and Horizontal axis: Log of GNI per capita.

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    World Bank Africa Development Indicators 2011

    Lines show polynomial fits. For , the line is horizontal since the VAY is constant at about 0. Data are from UNDP a. This has important policy consequences. Take for example Zimbabwe, the country with the lowest income in Ravallion shows that given the value of the HDI and its components, the country in would have obtained a higher HDI by implementing a policy that increased income by only 0.

    This implies that if a poor country decided to use the HDI to determine its stage of development, income would count much more than life length. Changes that would keep the value of the HDI constant include increasing life expectancy at birth in Austria by one year and decreasing Austria's GNI per capita by 9. The reductions in GNI per capita that keep the HDI constant when the mean years of schooling are increased by one year are large.

    In Austria, the reduction is The decrease in GNI per capita in Italy is In particular, Senegal had mean years of schooling of 2. Its value of the HDI would be the same if it increased it to 3.

    Selected problems with the HDI

    In Austria, a reduction in GNI per capita of A further relevant concern is related to the redundancy of HDI components. Life expectancy, GNI, and education are strongly correlated with one other, both empirically and conceptually McGillivray ; Ogwang ; Sen ; Ogwang and Abdou This is not surprising.

    People who are more educated tend to be richer and, on average, experience longer life spans. In itself, redundancy does not pose a problem for the reliability of the index. However, it does question the efficiency of the HDI, suggesting that the composite index might not reveal more than its single components. This is true also for the measurement of human development.

    Life expectancy represents a good candidate for this purpose. Since it is one of the three components included in the HDI, this strategy would require dropping education and GNI per capita. This would be problematic only to the extent that relevant information is lost.

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