What Does the Human Development Index Measure?

There’s been some interesting recent commentary on the Human Development Index. But first, some background. This index is calculated each year by the U.N. Development Program as a summary indicator of “Human Development,” combining data on life expectancy at birth, adult literacy, educational enrollment, and average income (measured as G.D.P. per capita). And earlier this week, Catherine Rampell noted a recent effort by the SSRC-funded American Human Development Project to develop a Human Development Index, for U.S. states. Philosophically, it is an attempt to broaden the development debate beyond G.D.P. But does it succeed?

Andrew Gelman isn’t convinced by this effort. Over at fivethirtyeight.com, he takes a close look at this new state-based index, comparing a state’s ranking in this new state-based human development measure and its ranking on average income. He finds yields an 86 percent correlation. Forget the high-falutin’ language of “human development,” Gelman argues, “You’re pretty much just mapping state income and giving it a fancy transformation and a fancy new name.” Over at Economix, Catherine Rampell responded, noting that the “U.N.’s index was not designed to capture the levels of variation that would occur within a single country. It was designed to make international comparisons.”

Given this debate, I wondered whether Gelman’s critique might also apply to the U.N.’s original cross-national Human Development Index, so I downloaded the latest data. The graph below compares a country’s ranking on the human development index with its ranking on average income. The correlation between the two is even stronger — a massive 95 percent! For all but a handful of countries, your ranking on average income is the same as your ranking on this multi-dimensional index.


For comparison, here’s Gelman’s graph for U.S. states. (The only way in which it differs is that Gelman gives the richest state the lowest ranking, rather than the highest ranking.)


For all the work that goes into the Human Development Index, it just doesn’t tell you much that you wouldn’t learn from simple comparisons of G.D.P. per capita. But you do get the veneer of something broader, with a normatively loaded name for this index.

But there’s another reason to be suspicious of the state-based human development index. Some commentators have been comparing the scores of individual states on the state-based index with the international index, which yields newsworthy bites, like “Mississippi has an H.D.I. level roughly on par with that of Turkey.” But the two indices aren’t comparable. Dig deep into the methods used to construct the AHDP’s state-based index, and you’ll find that not only are the inputs different, but so are the formulae. In principle, one could build indices to compare Mississippi and Turkey, but comparing different indices is comparing apples and oranges.

Economix has a longer discussion on the relevant data issues, here.

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  1. frankenduf says:

    well, at least now we know what’s wrong with missouri

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  2. ninth says:

    I haven’t taken a deep look at these methodologies, but it seems that you are going to incorporate some urbanized state bias by not deflating each state’s GDP with it’s respective costs (to my knowledge, there’s not state specific GDP deflator). So it may be the case that some of the more rural states, which likely have lower costs, get the shaft.

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  3. Mark B says:

    @ Dean who said…

    “As such, it should be obvious that HDI is not meant to be producing spectacularly different trends – it is meant to be used alongside GDP to illustrate intricacies in the socio-economic structure and institutions of countries (or states) – especially those based on inequality.”

    But there are measures of inequality that can be used directly and intuitively rather than the HDI to GDP and see where they diverge three-step process. Of course measures of inequality do have some controversy, however I would be surprised if they have an inflated error compared to the three step process you describe.

    Has anyone factor analyzed the measures used to create HDI? If they all load well on one factor (which I think is likely) then it would suggest that the HDI is a good measure that just combines several highly correlated variables.

    It also isn’t surprising that GDP and HDI correlate so well, because one contains the other… Besides the intuitive notion that countries with more money can have better education and medicine the HDI actually contains GDP per capita. The correlations reported above seem to be GDP correlated with a different version of itself. How do those correlations look if you remove GDP from the HDI calculation?

    Another further consideration. How well to the individual-level versions of these variables correlate? How do they factor analyze?

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  4. Adam S says:

    > For all but a handful of countries, your ranking on average income is the same as your ranking on this multi-dimensional index.

    I’m not sure if this is consistent with the data in the HDI report. The final column on page #229-232 of the 2008/2008 report lists the GDP per capita rank minus the HDI rank.

    A quick glance shows only 3 or 4 countries out of 177 for which the HDI rank and GDP rank are exactly the same. For some (Norway, Switzerland) the differences are so small that the meaning of your post is not significantly changed, but for others at the top of the list (Australia, the US) the difference is significant.

    Not to mention some countries (Cuba, Botswana, South Africa) which range from 40 to 70 positions difference between GDP and HDI ranks.

    Are we talking about the same data?

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  5. S. Burd-Sharps, K. Lewis says:

    Although income is an important part of well-being, it fails to tell the whole story of how people are faring. Our work in the U.S., using official government statistics from the U.S. Census Bureau and the CDC, shows why. Let’s compare two congressional districts, Vermont’s only district and Nevada’s First District. Median personal earnings in both congressional districts are nearly the same: about $26,300 per year. However, the two districts are separated by 223 places on the American Human Development Index (on a ranked list of the country’s 436 congressional districts). Why? A baby born in Vermont today can expect to live, on average, three and a half more years than a baby born in Nevada’s First District. And while about one in ten adults in Vermont today did not graduate from high school, in Nevada’s First District, that number is about one in four. For people to flourish in our globalized, information-intensive world, completing high school is a bare minimum. Of course in order to fully understand why these two districts with nearly identical income levels have such different outcomes in health and education, one would need to analyze a fuller range of indicators, as well as historical circumstances. But the data make clear that money is buying neither a better education nor a longer life for the average Nevadan. This is one value of the American Human Development Index.

    The mere fact that income is responsible for one third of the human development index guarantees that there will be a strong correlation. In addition, income is strongly correlated to pretty much any social indicator one can think of.

    While The Measure of America: American Human Development Report 2008-2009 is a first-ever human development report for an advanced economy, human development reports have been written for nearly two decades in over 150 countries around the world. They tell the story of the power of this tool. With the human development index as the centerpiece, they help stimulate a more reasoned dialogue on difficult issues based on objective evidence– from post-apartheid racial disparities in South Africa, to Russia’s role in regional development, to the roots of conflict in Colombia. In the Philippines, the HD Index is an official government statistic, and the annual ranking helps to build healthy competition among the country’s provinces to translate GDP and wealth into improved opportunity and freedom. In the best of cases, as happened with the AIDS epidemic in Botswana, these reports can actually change the course of history, save lives, and bring greater peace and prosperity.

    Why has the human development index been so successful in challenging GDP as an alternative? One of its strongest attributes is its simplicity. It uses only three variables to capture well-being: a long and healthy life, access to knowledge, and a decent standard of living. Most people would agree those three are the basic ingredients of a life worth living. But its simplicity is also its weakness. It certainly does not capture the full range of capabilities central to a fulfilling life-things like the ability to live in a clean environment, to live free from violence, to participate in the decisions that affect us, and more. No summary index can tell the full story. But it can be a great way to get a conversation started.

    —-Sarah Burd-Sharps and Kristen Lewis, co-authors of “The Measure of America: American Human Development Report 2008-2009″

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  6. Sebastian says:

    I think one of the most interesting parts about the HDI are the outliers.
    What we see there is that
    1) the oil states (the little cloud off the line on the bottom left) aren’t doing great.
    2) HIV rates, as Tom Smith notes, are a major issue, in a way especially for mid-income countries (GNQ is Equatorial New Guinea and GAB is Gabon, these are ISO country codes
    (I find it very amusing that there is an int’l standard for country codes
    3) Cuba does exceptionally well – which is in line with 100% literacy and developed country like life expectancy there, but also shows that HDI does take into account neither political liberty, nor middle-class prosperity.

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  7. jd says:

    Wasn’t Iceland number one last year?

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  8. st says:

    Black-Sholes formula for Human? No wonder college is going to down size from 4 year to 3 year program in order to help student in the hard time… HDI acceleration… cute.

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