World Economics - Insight , Analysis and Data

World Economics - Insight , Analysis and Data

The Human Development Index (HDI)

An illustration of the difficulties faced when building economic indices

Avantika Chilkoti - December 2011

Speed Read:
  • When selecting the variables to include in a measure of human development, controversy is inevitable as the decision-maker is essentially defining what it is that gives people greater satisfaction and a better life

  • The Human Development Index - bringing together income, health and education - is used to compare human development in different nations

  • Key changes to this indicator reflect the difficulty of such a statistical exercise and of keeping the measure relevant. For instance, income is now accounted for using the GNI rather than GDP, as the increasing flows of international remittances skew national income figures and the index is now composed using geometric, rather than arithmetic, mean to reflect the fact that the different elements are not substitutable

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