Human Development Index

Human Development Index: When the United Nations Development Programme (UNDP) published its first Human Development Report (HDR) in 1990, the problem of measuring economies’ developmental levels was solved. A human development index (HDI) was included in the report, which was the first attempt to define and measure the level of economic development.

Creation of Human Development Index

The ‘index’ was created by a small group of leading academics, development practitioners, and members of the UNDP’s Human Development Report office. Mahbub ul Haq and Inge Kaul led the first group that developed the Human Development Index. In the index, the term ‘human development’ is a corollary of ‘development.’ The HDR is a composite human development index that is calculated by combining three indicators: health, education, and standard of living.

The development of a single statistic in the Human Development Index was a true breakthrough, serving as a benchmark for both “social” and “economic” development. The Human Development Index establishes a minimum and maximum value for each dimension, known as goalposts, and then displays where each country stands in relation to these goalposts as a number between 0 and 1. (i.e., the index is prepared on the scale of one). The following are the three indicators that were used to create the composite index:

Education component of the Human Development Index

The Education component of the Human Development Index is now (since HDR-2010) measured by two other indicators:

• Mean of years of schooling (for adults aged 25 years): This is estimated based on educational attainment data from censuses and surveys available in the UNESCO Institute for Statistics database and Barro and Lee (2010) methodology.
• Expected years of schooling (for children of school entering age): These estimates are based on enrolment by age at all levels of education and the population of official school age for each level of education. Expected years of schooling are capped at 18 years.

These indicators are normalized by setting the minimum value to zero and the maximum value to the actual observed maximum value of mean years of schooling from the countries in the time series, 1980-2012, which is 13.3 years in 2010. The geometric mean of the two indices makes up the education index.

The Human Development Index’s life expectancy at birth component is used to calculate the Health component, which has a minimum of 20 years and a maximum of 83.57 years. From 1980 to 2012, this is the observed maximum value of the indicators from the countries in the time series. Thus, the longevity component for a country with a 55-year life expectancy at birth is 0.551.

Standard of Living component is measured

Instead of GDP per capita (PPP $), the Standard of Living component is measured by GNI (Gross National Income/Product) per capita at ‘Purchasing Power Parity in US Dollars (PPP $). The minimum income goalpost is $100 (PPP), and the maximum income goalpost is US $87,478 (PPP), as estimated for Qatar in 2012. The logarithm of income is used in the Human Development Index to reflect the decreasing importance of income as GNI rises.

The three HDI dimension indices’ scores are then combined using a geometric mean to create a composite index. The Human Development Index makes it easier to compare and contrast experiences within and between countries.

On a scale of one to ten, the UNDP ranked the economies based on their achievements on the three parameters mentioned above (i.e., 0.000-1.000). The countries were divided into three categories based on their achievements, each with a different number of points on the index:

• High Human Development Countries: 0.800-1.000 points on the index.
• Medium Human Development Countries: 0.500-0.799 points on the index.
• Low Human Development Countries: 0.000-0.499 points on the index.

Despite the fact that the UNDP-commissioned team reached a consensus on what constitutes development, academicians and experts around the world continue to debate the topic. By 1995, economies all over the world had formally accepted the UNDP’s concept of human development. Since the 1990s, the World Bank has been using the UNDP-designed HDR to quantify member countries’ developmental efforts and allocate low-cost developmental funds in accordance.

Member countries began to prioritize income, education, and life expectancy in their policymaking

Naturally, member countries began to prioritize income, education, and life expectancy in their policymaking, and the HDI concept gained widespread acceptance, whether mandatory or voluntary.

For many years, experts and academics devised their own definitions of development. They gave the determinants of development unequal weighting and chose some completely different parameters that could also be used to better denote development. This representation was possible because quality is a matter of value judgment and a normative concept.

Most of these attempts were not intended to propose an alternative development index, but rather to demonstrate the HDI’s inadequacy through intellectual satires. In 1999, economists and scholars from the London School of Economics concluded that Bangladesh was the most developed country in the world, with the United States, Norway, and Sweden receiving the lowest rankings.

In general, such an index is very likely to be created. For example, we could say that peace of mind is a necessary component of human development and improvement, which is heavily influenced by how much sleep we get on a daily basis. House theft and burglary are major determinants of a good night’s sleep, which is dependent on how secure we feel about going to sleep in our homes at night. It means that we can use data on home thefts and burglaries to determine how well we sleep.

Because minor house thefts and burglaries are under-reported in police stations, the surveyor may have attempted to learn about such incidents using data such as how many ‘locks’ were sold in a given year. In this way, a country where people have little to lose or have no fear of being burgled may be considered to have the best night’s sleep, thus the best peace of mind, and thus will be the most developed.

Essentially, the HDI can be thought of as one possible method of measuring development that was developed by a group of experts with the greatest degree of consensus. However, the index that calculates economic growth based on a set of parameters may be overlooking many other important factors that influence economic growth and living standards. Other determinants affecting our living conditions, according to experts, include:

• cultural aspects of the economy,
• outlook towards aesthetics and purity of the environment,
• aspects related to the rule and administration of the economy,
• people’s idea of happiness and prestige,
• the ethical dimension of human life, etc.

Introspecting Development

Only after the World Bank and the International Monetary Fund were established did there be confusion about what development really meant. Experts were surveying the performance reports of the developed world while studying the developing world’s development process. As the western world became more developed, with top twenty HDI rankings, social scientists began to assess the living conditions in these economies.

The majority of these studies found that life in the developed world is far from happy. In the developed world, crime, corruption, burglaries, extortion, drug trafficking, flesh trade, rape, homicide, moral degradation, sexual perversion, and other so-called vices thrived. It means that development has failed to provide them with happiness, peace of mind, general well-being, and a sense of well-being. Scholars began to question the very efforts being made for global development. The majority of them have advocated for redefining development in order to bring happiness to humanity.

Why hasn’t progress brought happiness to the developed world? The answer to this question is not found in any single objective fact, but rather in a wide range of human experiences. To begin with, when economists spoke of progress, they meant overall happiness in human life. Progress, growth, development, well-being, and welfare have all been used as synonyms for “happiness” by social scientists. Happiness is both a normative concept and a mental state. As a result, its concept may differ from one economy to the next.

Second, during the period in which development was defined, it was thought that by providing certain material resources, human life could be improved. These resources were identified as a higher level of income, adequate nutrition, healthcare facilities, adequate literacy and education, and so on.

Happiness is a broader concept than progress

Happiness is a broader concept than progress. The so-called “development” for which the world has been working for decades is capable of bringing material happiness to humanity. Happiness has a non-material component as well. It means that, while the world tried to maximize its development prospects, i.e., material happiness, it was unable to attend to the non-material aspect of happiness. Ethics, religion, spiritualism, and cultural values all play a role in the non-material aspects of our lives.

Because development or human development is defined in material terms, it can only provide us with material happiness that is visible in the developed world. The developed world has been able to achieve development, i.e. happiness, but only of the material kind, due to a partial definition of development. We need to rethink development for the non-material aspects of happiness.

Somehow, a very small kingdom had managed to define development in its own way, encompassing both material and non-material aspects of life, and dubbed it Gross National Happiness (GNH). Bhutan is the country in question.

Bhutan, a small Himalayan kingdom

Bhutan, a small Himalayan kingdom and economic non-entity developed a new concept of measuring development in the early 1970s called Gross National Happiness (GNH) (GNH). The kingdom has been officially following the GNH targets, despite rejecting the UNDP’s concept of human development. Bhutan has been following the GNH since 1972 which has the following parameters to attain happiness/development:

• Higher real per capita income
• Good governance
• Environmental protection
• Cultural promotion (i.e., inculcation of ethical and spiritual values in life without which, it says, progress may become a curse rather than a blessing)

The GNH and the HDI are equal in terms of real per capita income. Though the HDI is silent on the topic of ‘good governance,’ it is now widely promoted around the world, thanks to the World Bank’s report on the subject in 1995, which was imposed on member states. Though the HDI didn’t mention it, the World Bank and the United Nations had already accepted the urgency of sustainable development by that time, and by the early 1990s, there was a separate UN Convention on the subject (follow up on this convention has been really very low till date which is a different issue).

It means that the fundamental difference between the GNH and the HDI is measured at the level of ethical and spiritual integration into our (UNDP’s) concept of development.

Material achievements, without some ethics at their foundation, are unable to bring us happiness, according to a fair analysis. And religious and spiritual texts contain ethical principles. The new world, on the other hand, is guided by its own scientific and secular interpretation of life, and the world has always been wary of acknowledging the spiritual aspect of human life. Rather, the western concept of secularism is defined by rejecting the existence of anything resembling God, as well as the entire traditional hypothesis of spiritualism, as examples of ignorance and orthodoxy.

And there should be no doubt that, in the name of development, western ideology has ultimately dominated the modern world and its way of life. The development philosophy that a large part of the world adopted was completely ‘this-worldly.’ And anyone can now assess the level of happiness that the world has managed to achieve in the end.

A recent UNDP study on Bhutanese development under the GNH has validated the concept of ‘gross happiness,’ which development must produce. According to the study, development between 1984 and 1998 was spectacular, with life expectancy increasing by 19 years, gross school enrolment reaching 72 percent, and literacy reaching 47.5 percent (from just 17 percent).

Following the terrorist attack on the World Trade Center in New York, the entire world has undergone a psychological transformation, and the euphoria of development from this world to that world has been shaken to its core. On the one hand, the world, which is undergoing globalization, has begun to consider whether multicultural coexistence is possible. Cultural Liberty in Today’s Diverse World was the title of the 2004 Human Development Report.

We can conclude that mankind is undergoing a period of serious introspection and transition, during which the dominant worldview may metamorphose into a redefining of development itself, with ethical values and spiritualism as important components. However, proponents of development appear to be hesitant to believe and accept wholeheartedly that there is a non-material aspect of life that must be realized in order for our development to result in happiness.