Economy 4.0

Alternative Indicator: The Human Development Index

Emilie Mutert Oct 5, 2010

Reminding us that, at the very least, our species is still developing, the Human Development Index attempts to rate and rank countries according to their economic, social and educational progress.

What is it?

The U.S. Human Development Index was most recently a 0.956, putting us at #13 out of 182 countries. Norway is number one on this list with an index of 0.971. Coming in last place is Niger – its index is 0.340.

What does it measure?

The Human Development Index was created by the United Nations Development Programme in 1990 to measure countries’ yearly progress, specifically focusing on categories within three dimensions: longevity, education and standard of living. This year it was calculated for 182 countries, making these rankings some of the most comprehensive of all the alternative indexes.

How do they get there?

The composite measure takes into account factors from three different dimensions. The first, living a long and healthy life, is measured by life expectancy. The second, being educated, is quantified by looking at adult literacy rates and gross enrollment in education. And the third, the overall standard of living, is measured by looking at Purchasing Power Parity and income.

What can it tell us (really)?

The HDI is good for looking at development within countries over long periods of time. For instance, we can tell that between 1980 and 2007, the U.S. HDI increased from 0.894 to 0.956, with an average increase of 0.25 percent each year.

But nobody’s perfect

In this case, the index doesn’t tell such a compelling story in the short term. Of all the indicators, only income and gross enrollment are somewhat responsive to short-term policy changes. In other words, the story of Human Development is best told over longer periods of time, when changes in life expectancy and other factors can be evaluated in an historically more accurate manner.

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