The Human Development Index is a very poor indicator of country progress, but the alternatives are worse.

Authors Avatar

The Human Development Index is a very poor indicator of country progress, but the alternatives are worse

Human development, or country progress, is an intriguing concept because of the normative considerations which surround any definition, and given this (inevitably controversial) definition, how best it can be measured so that appropriate policies can be formulated to improve the level or growth rate of human development thus defined.  The concept of human development is inextricably tied up with notions of poverty and inequality which again are not definitive, exacerbating the lack of consensus.  

In order to assess the use of the Human Development Index (HDI), attention needs to be first focussed on defining human development itself, which is what the index aims to measure.  There are many sub-concepts which are included in the definition of human development which themselves need clarifying.  Given all definitions will be controversial, it is imperative that they are laid out meticulously so the merits or downfalls of the HDI discussed are based only on the definitions given.  The HDI will be ‘put to the test’ to establish its validity and relevance of demonstrating the level or growth of human development in a country.  Where the HDI is not a good indicator of a particular aspect of human development, alternatives will be proposed and evaluated.  A conclusion will be drawn on whether the HDI is a good indicator and even if this proves not to be the case whether it is the best out of the current alternatives or not.

Today, human development is defined in broader social and political goals, than was the case with the “Washington Consensus’” (Stiglitz) when crude and narrow measures of GNP/capita, and economic growth was more or less equated with a better life.  However, as will be seen in the definitions of relative and absolute poverty, this is not necessarily indicative of well-being and welfare which are shown by higher levels of capabilities and functioning.  To give an example, in Kerala, India the GNP/capita is much lower than many other Indian states, yet life expectancy there is much higher, and literacy rates are comparables to those of MDCs.  In this case, Kerala would be deemed to have a higher level of human development than the state of Punjab.  This empirical illustration immediately shows the limitations of using narrow measures alone and hence the formulation of measures such as the HDI.

Human development then involves achieving a better life via the process of “enlarging people’s choices…which depends not only on income, but also on social indicators” (UNDP, 1990).  Improved well-being obviously connects with the reduction of poverty.  Poverty is a dynamic concept for it has both relative and absolute associations which vary over time and space.  Sen (1984) provides a concise method of making this often-confusing distinction between absolute and relative poverty by using the sequence from a commodity (e.g. a bike), to characteristics (transportation), to capability to function (ability to move), to utility (pleasure from moving).  He says that poverty is an absolute notion in the space of capabilities, but a relative notion in the space of commodities and characteristics.  Given this, any index of human development needs to incorporate the measurement of capabilities.  Linking this back to human development then, in addition to measuring e.g. GDP/capita to give levels of relative poverty, measurements of absolute poverty must be taken.  One may ask why not then just measure absolute poverty levels as if this is low, then one knows that relative poverty levels are probably low.  The reason in an indicator of country progress one would look for both types of poverty is because then for the purpose of effective human development policymaking one could see if absolute poverty is at a high level due to relative poverty prevailing, or due to the fact that relative advantages of a good GDP level for that country (based on e.g. the cost of a basket of goods) are not being converted into absolute poverty reduction Possible reasons for low rates of conversion into capabilities include a lack of freedom.  

Join now!

Another flaw of the GNP/capita method is that it ignores the inequality of income, which means it ignores inequality of consumption, a certain level of consumption being what is need for absolute poverty reduction or removal. It must be noted, that although poverty and inequality are not interchangeable concepts, (given that for example a population of a country may be equally in relative and absolute poverty below an established basic universal poverty line which does not signify human development,) normally what will be found in a poorer country is large structural inequalities which, with the correct reallocation of resources ...

This is a preview of the whole essay