Calculating the Human Development Indices The Human Development Indices • The HDI (Human Development Index) - a summary measure of human development The Human Development Indices • The HDI (Human Development Index) - a summary measure of human development • The GDI (Gender-related Development Index) - the HDI discounted for gender inequality The Human Development Indices • The HDI (Human Development Index) - a summary measure of human development • The GDI (Gender-related Development Index) - the HDI adjusted for gender inequality • The GEM (Gender Empowerment Measure) - Measures gender equality in economic and political participation and decision making The Human Development Indices • The HDI (Human Development Index) - a summary measure of human development • The GDI (Gender-related Development Index) - the HDI adjusted for gender inequality • The GEM (Gender Empowerment Measure) - Measures gender equality in economic and political participation and decision making • The HPI (Human Poverty Index) - Captures the level of human poverty Walk through the steps of calculating – • The HDI (Human Development Index) - a summary measure of human development • The GDI (Gender-related Development Index) - the HDI adjusted for gender inequality Why Statistics? “ …as long as we are unable to put our arguments into figures, the voice of our science, although occasionally it may help to dispel gross errors, will never be heard by practical men. They are, by instinct, econometricians all of them, in their distrust of anything not amenable to exact proof.” -J.A. Shumpeter 1933 “The common sense of econometrics.” Econometrica 1:5-12 Why HDI? Human development accounting vs. a summary measure – “Give me a measure – a single measure – which is as vulgar as GNP per capita, but not as insensitive to broader aspects of human life.” - Mahbubul Haq ?A advocacy tool ?Simplicity and focus ?A Composite combines economic + social factors The basic steps Note the similarity between HDI and GDI in components methodology The 3 steps to creating the index What dimensions of human development to include What indicators to use to capture these dimensions How to combine these dimensions and indicators to create one number Dimensions A long and healthy life Being Knowledgeable A decent standard of living Calculating the HDI [...]... Then Actual value – 25 Life expectancy = -index 85 - 25 2 The Education Index Recall: Actual value – Minimum Index = -Maximum – Minimum and the goalposts for ALR and GER [0, 100] Then ALR - 0 ALR ALR index = - = -100 - 0 100 GER - 0 GER GER index = - = 100 – 0 100 2 The Education Index (continued) The Education index is a weighted average of the. .. Education Index Income Index Dimensions Calculating the HDI A long and healthy life Being Knowledgeable A decent standard of living Indicators Life expectancy Literacy & Enrolment GDP Per capita Dimension Index Life expectancy index Education Index Income Index Dimensions HDI ? HDI = the simple average of the three dimension indices The indicators for the dimensions Health: Life expectancy at birth (years)... of the ALR index and the GER index Education index = 2/3 ALR index + 1/3 GER index 3 The Income Index The GDP per capita (PPP$) is transformed to log (GDP per capita) – meaning increases of income at lower levels have a greater impact on the income index With goalposts for income [100, 40,000] log (GDP) – log (100) Income index = log (40,000) – log (100) Creating the income index 1 GDP... -Maximum of Xi – Minimum of Xi Defining the goalposts Indicator Life expectancy (years) Adult literacy rate (%) Gross enrolment ratio (%) GDP per capita (PPP US$) Minimum Maximum 25 85 0 100 0 100 100 40,000 Calculating the dimension indices 1 Life expectancy index 2 Education index – a weighted average of Adult literacy index + Gross enrolment index 3 Income index 1 The Life Expectancy Index Recall: Actual... 2000 • Brazil ranks 73rd among 173 countries in HDR2002 (among the medium HD countries) • Brazil lags behind many other Latin American countries (e.g., Chile-38, Mexico-54, Venezuela69) • Brazil has experienced continued improvement in HDI since 1975 (0.644 in 75 – 0.713 in 1990 – 0.757 in 2000) Applications: Trend analyses E.g Table 2 Human development index trend Based on same methodology and comparable... measures – capture the shorter run impacts of policies Applications: Disaggregating HDI Using HDI to study inequality In South Africa, HDI is 0.531 for Northern Province compared to 0.712 for Gauteng In India, HDI for ‘untouchables’ (0.239) is almost half that for Brahmins (0.439) In the United States, HDI for White Americans: 0.870 African Americans: 0.805 Hispanic Americans: 0.756 ?Check out the components!...Calculating the HDI Dimensions A long and healthy life Being Knowledgeable A decent standard of living Indicators Life expectancy Literacy & Enrolment GDP Per capita Calculating the HDI Dimensions Indicators Dimension Index A long and healthy life Being Knowledgeable A decent standard of living Life expectancy Literacy & Enrolment GDP Per capita Education Index Income Index Life expectancy index Calculating the. .. (PPPUS$) 40,000 Creating the HDI HDI = 1/3 Life expectancy index + 1/3 Education index + 1/3 Income index Or life expectancy + education + income index index index HDI = -3 Example: calculating HDI for Brazil 2000 Data: Life expectancy - 67.7 years Adult literacy rate - 85.2% Gross enrolment ratio* - 80% GDP per capita - 7,625 (PPPUS$) (source: Human Development Report 2002)... Health: Life expectancy at birth (years) Knowledge: Adult literacy rate (%) Combined primary, secondary and tertiary gross enrolment ratio (%) Standard of living: GDP per capita (PPP US$) The critical step – calculating the dimension index: Measurement of relative performance For each indicator a minimum and maximum goalposts must be defined Actual value of indicator i for country j Minimum X i,j of indicator . Calculating the Human Development Indices The Human Development Indices • The HDI (Human Development Index) - a summary measure of human development The Human Development. inequality The Human Development Indices • The HDI (Human Development Index) - a summary measure of human development • The GDI (Gender-related Development