Human Development: Concept and Measurement‘A simplistic presentation and comparison of performance in a given area to be used as a starting point for future analysis.’ OECD, discussion

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4 November 2009 Vijayamohan CDS 1Vijayamohan CDS

HumanHuman DevelopmentDevelopment::

Concept and MeasurementConcept and Measurement

DrDr VijayamohananVijayamohanan PillaiPillai NN

CDSCDS

Vijayamohan CDS

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Aim ofAim ofPresentationPresentation

Vijayamohan CDS

•• To provide an introduction toTo provide an introduction to

•• the Human Development conceptthe Human Development concept

Vijayamohan CDS

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•• To provide an introduction toTo provide an introduction to

•• HD Measurement IssuesHD Measurement Issues

Aim ofAim ofPresentationPresentation

Vijayamohan CDS

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• Dates back at least to

Aristotle (384 -322

BC)

– “wealth is evidently

not the good we

are seeking, for it is

merely useful and

for the sake of

something else”Vijayamohan CDS


• That “something else” is the

opportunity of people to realize their

potential as human beings.

Real opportunity is about having

real choices—the choices that come

with a sufficient income, an

education, good health and living in a

country that is not governed by

tyranny. —2006 global HDR

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Expanded with inputs

from Amartya Sen’s and

Martha Nussbaum’s

‘Capability Approach’

• Presented in the first Global

Human Development Report

in 1990 by Mahbub ul Haq


The capability approach: Amartya Sen:

emphasizes

human achievements and freedoms.

challenges the common view :

poverty is purely a deprivation of income,

underscores :

human beings are both agents and

beneficiaries of development

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What is Human Development?What is Human Development?

§ A theory and approach that integrates

economic, social and political development.

§ Stresses two aspects:

l the formation of human capabilities; and

l the utilisation of acquired capabilities

(or their functionings)


The capability approach

evaluates the various “functionings”

in human life

(what people want to do

and what they aspire to be)

and

their capabilities to achieve these

functionings.

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The capabilities to achieve the functionings

include (but are not limited to)

• Long and healthy lives

• Access to knowledge and the power to use it

• Decent standards of living

• Active community participation and

autonomy in personal decision-making

Human development


§ Contrasts with a common view that

poverty is purely deprivation of income

§ Rests on four essential pillars:

l Equality

l Productivity

l Empowerment

l Sustainability

Human development

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Human development

people-centred development:

Aristotle: wealth is only a means to

something else.

What is important is how income is used to

improve human development.


“Our Gross National Product counts air

pollution…and television programs which glorify

violence in order to sell toys to our children.

Yet the Gross National Product does not allow for

the health of our children, the quality of their

education, or the joy of their play… it measures

everything, in short, except that which makes life

worthwhile.” —US PRESIDENTIAL CANDIDATE

ROBERT F. KENNEDY

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Human development

§ Is a holistic approach covering all aspects of

development

l combines economic growth, basic needs

and capabilities approaches

l the vantage point is widening people’s

choices and the enrichment of their lives

But issues and measurement

to be situated in

national development

contexts


Questioning the legitimacy of economic growth

as the only measure of a nation’s level of

development.

The development discourse :

from the basic needs approach (BNA)

to an emphasis on human capabilities.

BNA: focused mainly on incomes, public

services and participation

Paradigm Shift

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HD and EconomicHD and EconomicGrowthGrowth

§ Economic growth is important

§ increases a nation’s total wealth

§ enhances potential to reduce poverty

and

§ address other social problems

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§ However, whether economicgrowth will enhance humandevelopment or not depends onhow that growth is generated

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Eco

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Eco

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Eco

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mic

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InMozambiqueapproximately55 childrendie daily duetocontaminatedwater

Eco

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mic

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igm

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Eco

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§ Economic growth may be achieved

alongside:

§ greater inequality - ruthless growth

§ higher unemployment - jobless growth

§ weakened democracy - voiceless growth

§ loss of cultural identity - rootless growth

§ over-exploitation of resources needed for

future generations - futureless growth

HD andHD andEconomicEconomicGrowthGrowth

Vijayamohan CDS


MeasuringMeasuringHumanHumanDevelopmentDevelopment

§ What is distinctive?

l Holistic view – examining a topic from all

angles

l Addresses new issues – globalisation,

political and cultural freedom, human

security

l Emphasis on equity and the marginalised

– requiring disaggregation to geographical,

demographic, ethnic or other sub-groups

of society

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Measuring Human DevelopmentMeasuring Human Development

§ Why seek an alternative to measuring GNI

growth?

§ A single variable – or simple set of

variables – does not capture the

multidimensionality of human

development


§ Why seek an alternative to measuring GNI

growth?

§ Some choices do not depend on income or

wealth (eg poor countries can be democratic,

rich countries can be in conflict)

§ National income covers good and ill (eg

income from guns as well as from

technological developments)

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People’s

Perception of

Poverty

Since the

meaning of

poverty varies

widely,

it cannot be

completely

captured by a

single measureVijayamohan CDS


The Human Development Index

Inadequacy of GDP as a yardstick for a

country’s development

a more comprehensive measure capturing

socioeconomic progress and human well-

being.

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The Human Development Index

HD many dimensions,

some easier to measure than others.

HDI : aggregate measure of basic

dimensions of human development,

compares human development progress

across countries.


The global HDR:

4 main composite

human development

indices to assess

measurable dimensions

of HD.

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Composite indicatorsComposite indicatorsand indicesand indices

A composite indicator is:

‘A simplistic presentation and comparison

of performance in a given area to be used

as a starting point for future analysis.’

OECD, discussion of composite indicators

Vijayamohan CDS


Humandevelopment

Indices

The global HDR:

4 main composite human development indices

to assess measurable dimensions of HD.

the human development index (HDI)

the human poverty index (HPI)

the gender-related development index (GDI)

and

the gender empowerment measure (GEM).

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Vijayamohan CDS

Human developmentIndices

§ The HDI

- a summary

measure of

(achievement of)

human

development

§ The HPI

- a deprivation

measure of the

level of human

poverty


§ The GDI - the HDIadjusted for genderinequality

§ The GEM

- Measures gender

equality in

economic and

political

participation and

decision making

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HDI (and GDI) conceptHDI (and GDI) concept

§ Measures achievement in human

development

§ Three equivalent themes

l Long and healthy life

l Access to knowledge

l A decent – not excessive – standard of

living

§ GDI ‘discounts’ HDI for gender inequalities


HPI conceptHPI concept

§ Measures deprivation rather than

achievement

§ Again three equivalent themes:

l Vulnerability to death

l Exclusion from the world of knowledge

l Lack of access to basic provisions

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GEM conceptGEM concept

§ Measures opportunities rather than

capabilities

§ Three concepts

l Parliamentary empowerment

l Occupational/legislative empowerment

l Economic empowerment


Which indicators?Which indicators?§ Need to reflect the concept

§ Must be available – and comparable - for a

large number of

countries/regions/districts

§ Preferably reflect recent changes

§ Preferably updated on a regular basis

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HDI and GDIHDI and GDI

§ Long and healthy life- life expectancy at birth

§ Access to knowledge- adult literacy rate- combined gross enrolment ratio

§ A decent standard of living- GDP per capita (in PPP $) for HDI

- estimated earned income (PPP $) for GDI

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HPIHPI

Vulnerability to early death

Probability of not surviving to age 40

Exclusion from the world of knowledge

Adult illiteracy rate

Lack of access to basic provisions

Population without access to improved

water

Percentage of children underweight for

ageVijayamohan CDS

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§ Human poverty - location specific

l Nature of deprivation vary with social

& economic conditions

l Choice of indicators has to be

sensitive to country specific context

• HPI -1 for developing countries

• HPI- 2 for developed countries

HPI:Two approachesHPI:Two approaches


Parliamentary empowerment

Percentage shares of parliamentaryseats

Occupational/legislative empowerment

Percentage shares of legislators &managers

Percentage shares of professional andtechnical workers

Economic empowerment

Estimated earned income (PPP $)

GEMGEM

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Development Indices and IndicatorsDevelopment Indices and Indicators

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Dimension A long andhealthy life

Knowledge Decentstandard of

living

Indicator Lifeexpectancy

at birth

Adultliteracy

rate

Grossenrolmentratio (GER)

GDP percapita

(PPP US$)

Adultliteracyindex

GER Index

Dimensionindex

Lifeexpectancy

index

Education index GDP index

Human Development Index (HDI)

Human Development Index (HDI)



Knowledge Decent standard of living

Indicator Probability atbirth of notsurviving to

age 40

Adultliteracyrate

Percentageof populationnot usingimprovedwatersources

Percentageof childrenunder fivewho areunderweight

Deprivation in standard ofliving

Human Poverty Index

for developing countries (HPI – 1)

Human Poverty Index (HPI – 1)

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Knowledge Decentstandardof living

Socialexclusion

Indicator Probability atbirth of notsurviving to

age 60

Percentageof adultslackingfunctionalliteracyskills

Percentageof peoplelivingbelow thepovertyline

Long-termunemploymentrate

Human Poverty Index

for selected OECD countries (HPI – 2)

Human Poverty Index (HPI – 2)



Knowledge Decent standardof living

Indicator Femalelife

expectancy

Malelife

expectancy

Femadult

literacy rate

FemGER

Maleadultlitera

cyrate

MaleGER

Femaleestimated earnedincome

Maleestimated earnedincome

Dimensionindices

Femalelife

expectancyindex

Malelife

expectancyindex

Femaleeducation

index

Maleeducation

index

Femaleincomeindex

Maleincomeindex

Equallydistributedindices

Equallydistributed life

expectancyindex

Equally distributededucation index

Equally distributedincome index

Gender-related Development Index (GDI)


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Dimension Politicalparticipation

Economic participationand decision-making

Power overeconomicresources

Indicator Female andmale shares

ofparliamentary

seats

Female andmale sharesof positions

aslegislators,

seniorofficials andmanagers

Female andmale shares

ofprofessionaland technical

positions

Female andmale

estimatedearnedincome

Equallydistributedequivalentpercentage

EDEP forparliamentaryrepresentation

EDEP for economicparticipation

EDEP forincome

Gender Empowerment Measure (GEM)

Gender Empowerment Measure (GEM)


Computation of

Human Development Index

The HDI

summary measure of human development.

Measures the average achievements in

three basic dimensions of human

development.

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India

53

National HDR IndiaNational HDR India

Vijayamohan CDS


Computation of Human Development Index forComputation of Human Development Index forKeralaKerala

Same methodology as UNDP’s.

However,

literacy rate of age 7 and above

instead of adult literacy rate

due to non-availability of data.

Gross school (up to high school) enrolment

ratio

instead of primary, secondary and

tertiary gross enrolment ratio.

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Dimension Indicator

Longevity Life expectancy at birth(%)

Knowledge Literacy rate (age 7 yearsand above (%) (2/3 wt.)

Gross school enrolmentratio (%) (1/3 wt.)

Standard ofliving

Real per capita income(PPP US$)

Computation of Human Development IndexComputation of Human Development Index



An index (0 – 1 scale) constructed for

each dimension by choosing maximum

and minimum values for each of the

underlying indicators.

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The dimension index is calculated by


XminXmax

XminXiindexDimension

(0 – 1 scale)

The Human Development Index is calculated

by averaging the dimension indices.


In computing the district KHDI, the same goalposts

used by UNDP for calculating the global HDI:

Indicator Minimum Maximum

Life expectancy at birth(years)

25 85

Literacy rate (7+) (%) 0 100

Gross enrolment ratio(%)

0 100

GDP per capita (PPPUS$)

100 40 000

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1. Income index

calculated using an adjusted NSDP per

capita (PPP US$).

(i) The district per capita NSDP in PPP US$

equivalent derived from

the per capita NSDP in rupees

multiplied by the ratio of national per

capita GDP in PPP US$ and national per

capita GDP in rupees.

Computation of Human Development IndexComputation of Human Development Indexfor districts in Keralafor districts in Kerala


For example,

Per capita NSDP for Kerala in 2001 at

constant prices = Rs.10963

Per capita GDP for India in 2001-02 at

constant prices = Rs.10754

Per capita GDP for India in 2001 (PPP US$ )

= $2840 (1 PPPUS$ = 3.787 INR)

Per capita NSDP for Kerala in 2001 (PPP US$)

= 10963*(2840/10754) = $2895


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(ii) The income index (0 – 1 scale) for Kerala:

562.0)100log()40000log(

)100log()2895log(indexincome



2. Life expectancy index:2. Life expectancy index:

The life expectancy at birth not available for the districts.

Hence an indirect estimation.

First, district level infant mortality rates given in 1991

Census have been adjusted based on the SRS estimates

given for Kerala for 1991 and 2000.

Assuming that the decline in the infant mortality rate in

the districts is the same as in Kerala as a whole during

the period 1991-2000,

infant mortality rates for all the districts have been

projected for the year 2000.

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Second, the life expectancy at birth in 2000

for all the districts have been derived from

the model life tables on the basis of these

estimated infant mortality rates.

The life expectancy at birth for Kerala :

74.6 years in 2000;

the life expectancy index (0 – 1 scale):

827.02585

256.74indexcytanecexpLife


3. Education index

District-wise literacy rate (7+) in 2001 from

Census 2001

District-wise gross school enrolment ratio

estimated by taking the ratio of number of

persons enrolled in the school (up to X

standard, including CBSE, ICSE schools) in

2001-02

and the corresponding school age population in

2001 (5-14 age group population).


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(i) The indexes for literacy rates and gross

enrolment ratio are calculated.

(ii) These indices are combined to derive an

education index, with two third-weight

given to literacy rate and one-third weight

to gross enrolment ratio.

For Kerala, the literacy rate = 87.9 percent

and the gross enrolment rate = 97.3

percent.



The Education index (0 – 1 scale) computed:

Literacy index = (87.9-0)/(100-0) = 0.879

Gross enrolment index = (97.3-0)/(100-0) =

0.973

Education index = (2/3) * literacy index +

(1/3)* gross enrolment index

= (2/3)*0.879+(1/3)*0.973

= 0. 910

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4. Calculating the HDI

HDI : simple average of the three dimension

indices.

HDI = (1/3) *(income index + life

expectancy index + education index)

HDI (Kerala) = (1/3) (0.562+0.827+0.910)

= 0.773



GDI adjusts the average achievement to

reflect the inequalities between men and

women in human development.

The components of GDI used for

computing districts are the following:


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Dimension Indicator

Longevity Life expectancy at birth(%)

Knowledge Literacy rate (age 7 yearsand above (%)

Gross school enrolmentratio (%)

Standard ofliving

Real per capita income(PPP US$)

GenderGender--related Development Index (GDI)related Development Index (GDI)


first step:

female and male indices (0 – 1 scale) for

each dimension are calculated:

XminXmax

XminXiindexDimension

The same goalposts (maximum and

minimum values) as used by the UNDP


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Indicator Minimum Maximum

Female Life expectancyat birth (years)

27.5 87.5

Male Life expectancy atbirth (years)

22.5 82.5

Literacy rate (7+) (%) 0 100

Gross enrolment ratio(%)

0 100

Estimated earnedincome (PPP US$)

100 40 000



Second step:

the male and female indices in each

dimension are combined that penalizes

differences in achievement between men

and women.

The resulting index referred to as the

equally distributed index (EDI)


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FPS (MPS)= Female (Male) population share;

FI (MI) = Female (Male) index.

The measures the aversion to inequality.

In the global GDI, = 2.


1

11)MI)(MPS(1)FI)(FPS(

Equally Distributed Index (EDI) =


Value of = size of the penalty for gender

inequality. Larger the value, the more

heavily a society is penalized for having

inequalities.

If = 0, gender inequality is not penalized

(Here GDI = HDI.)

As increases towards infinity, more and

more weight is given to the lesser achieving

group.

A value of 2 places a moderate penalty on

gender inequality in achievement.

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This gives the harmonic mean of the male and

female indices.

last step: GDI is calculated by taking a simple

average of the three equally distributed indices.



Calculating the GDI for districts in Kerala

1. Equally Distributed Income index

First, per capita income for women and men

are calculated from the female share and

male share of earned income.


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The female share of earned income =

)())((

))((

MWFW

FW

SSRFM

SRFMW

RFMW = Ratio of female to male wage

RFM = Ratio of female to male

SFW (SMW) = Share of Female (Male) workers;



NSS (1999-00),

rural agricultural wage

for female in Kerala = Rs.62.2 and

for men = Rs.94.5.

The wage for non agricultural unskilled

women workers = Rs.94.1 and

for men, = Rs.131.9.

Female (Male) wage (earned income) =

Average of rural agricultural wage and non-

agricultural unskilled workers wage.


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Female earned income = Rs. 78.15

Male earned income = Rs. 113.2

Same income assumed for all the districts.

The share of female (male) worker for each

district taken from 2001 Census.

The female (male) share of earned income

estimated with these data.



The estimated female (male) share of

earned income to compute the per capita

NSDP of women (men).

Adjusted for equivalent PPP US$.

Computed income dimension index for

female and male (0 – 1 scale).

Using these indices computed

the equally distributed income index.


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2. Equally distributed life expectancy index:

separate indices for male and female

achievements in life expectancy at birth

computed using general formula for

dimension index.

These dimensions indices are combined

to compute the equally distributed life

expectancy index.



3. Equally distributed education index

First step,

indices of literacy rate (7+) and gross

school enrolment ratio are calculated

separately for males and females.


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Second step,

the education index for male and female have

been calculated by giving two-thirds weight

to the literacy rate and one-third weight to

the gross enrolment index.

Finally,

the female and male education indices have

been combined to get the equally distributed

education index.



Computation of Deprivation Index forComputation of Deprivation Index fordistricts in Keraladistricts in Kerala

Measures the deprivation in the 4 basicnecessities of well-being:

Quality of housingAccess to water

Good sanitation, andElectricity lighting

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Deprivation in Quality of Housing (d1):

Measured through percentage of HHsnot residing in a permanent house

Permanent house: walls and roofs areMade of permanent materials



2. Deprivation in Access to Water (d2):

Measured thru the %age of HHs whosesource of drinking water is away fromthe house.Urban: beyond 100 metersRural: beyond 500 meters


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3. Deprivation in Good Sanitation (d3):

Measured through %age of HHs that donot have water closet latrine



4. Deprivation in Electricity Lighting (d4):

Measured thru %age of HHs that do nothave electricity as the source of lighting


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Indicators for all districts by socialgroups derived form the housing datain Census 2001



Index of deprivation =

= 1: Average of the indicatorsAs , greater wt is given to theindicators of most deprivation

/

)(1

4321

4

dddd


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UNDP takes = 3.So did we.

For example, deprivation index forKerala:d1 = 31.9; d2 = 12.0; d3 = 34.8; d4 = 29.8;Deprivation index for Kerala:

5294

82983412931313333

.)...(

/



The Human Poverty IndexThe Human Poverty Index

another measure of poverty.introduced in the 1997 global HDR as one ofthe human development indices.

The aim was to create a composite indexbringing together the different dimensions ofdeprivation in the quality of life, which wouldindicate the extent of poverty.

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incorporates four dimensions of humanlife—longevity, knowledge, economiccondition and social inclusion—

Two Approaches: HPI-1 for less developedcountriesandHPI-2 for selected OECD countries



Indicators for HPI-1: three dimensions

• A long and healthy life—measured by the probability at birth ofnot surviving to the age of 40;

• Knowledge—measured by the adult illiteracy rate;and


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Indicators for HPI-1: three dimensions

• A decent standard of living—measured bythe unweighted average of thepercentage of the population withoutsustainable access to an improvedwater source and the percentageof children underweight for age.



Indicators for HPI-2: 4 dimensions

• A long and healthy life— as measured bythe probability at birth of not surviving tothe age of 60;

• Knowledge—as measured by the percentage ofadults (16-65) lacking functional literacy skills;


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Indicators for HPI-2: 4 dimensions

• A decent standard of living-—measured bythe percentage of the population living below theincome poverty line (50 percent of the medianadjusted household disposable income); and

• Social exclusion—as measured by the rate oflong-term unemployment (12 months or more).



Formula used to calculate HPI – 1 and HPI – 2 :

Pi = ith indicator, I = 1, 2, 3.

UNDP uses = 3. = 1: Simple average of the indicatorsAs , greater wt is given to the indicators of mostdeprivation

/1

321

3

ppp1HPI

/1

4321

4

pppp2HPI


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Focusing on women’s opportunitiesrather than their capabilities,the GEM captures gender inequalityin three key areas:

TheThe GGender Empowerment Measure (GEM)


the GEM captures gender inequalityin three key areas:

1. Political participation and decision-making power,

as measured bywomen’s and men’spercentage shares of parliamentary seats.


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2. Economic participation and decision-making power,as measured by two indicators—(a) women’s and men’s percentage shares of

positions as legislators, senior officials andmanagers and

(b) women’s and men’s percentage shares ofprofessional and technical positions.




(3) Power over economic resources,as measured bywomen’s and men’s estimated earnedincome (PPP US$).


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For each of these three dimensions,an equally distributed equivalent percentage (EDEP)is calculated,as a population-weighted average.


1





FPS (MPS)= Female (Male) population share;

FI (MI) = Female (Male) index.

The measures the aversion to inequality.

In the global GDI, = 2.

1



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For political and economic participation anddecision-making,the EDEP is then indexed by dividing it by 50.

The rationale for this indexation:

in an ideal society, with equal empowerment of the sexes,the GEM variables would equal 50%—that is, women’s share would equal men’s sharefor each variable.



the GEM is calculated as aSimple average of the three indexed EDEPs.


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Vijayamohan CDS

Documents

Human Development: Concept and Measurement‘A simplistic presentation and comparison of performance in a given area to be used as a starting point for future analysis.’ OECD, discussion