The Human Development Indices

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Transcript The Human Development Indices

THE HUMAN DEVELOPMENT
INDICES
M.H. Suryanarayana
IGIDR
Mumbai
Human Development Index
Lecture Outline
Why was the HDI created?
What is the Human Development Index (HDI)?
What does the HDI tell us: evidence from the Human
Development Report 2005.
Is the HDI measure a foolproof measure of human
development?
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Human Development Index
Why was the HDI created?
 Limitations of GNP: GNP may grow due to sale of knives and
rifles ..does not allow health of children, quality of education,
or the joys of their play…
 For cross-country comparisons..
 Assess progress in human development across countries.
 Assess individual development with reference to ‘well-being’
 Though open to criticism, serves as a basic indicator and
allows ranking of countries in terms of human development
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Human Development Index
Why was the HDI created?, Cont…
Certainly not easy to gather the relevant information for each United
Nations country!!
Just think of the statistics and logistics that are required to generate
HDI for 177 countries!!!
The HDI can signal where problems lie which are important for both
country policy makers and international policy makers and agencies –
this really indicates the importance of information in the modern day
world and indeed the importance of information and how this is
processed for resource allocation.
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Human Development Index
What is the Human Development Index (HDI)?
“The human development index (HDI) is a composite index
that measures the average achievements in a country in three
basic dimensions of human development: a long and healthy
life, as measured by life expectancy at birth; knowledge, as
measured by the adult literacy rate and the combined gross
enrolment ratio for primary, secondary and tertiary schools;
and a decent standard of living, as measured by GDP per
capita in purchasing power parity (PPP) US dollars”
(United Nations(2005): Human Development Report 2005, p.
214)
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Human Development Index
•
•
What is the Human Development Index (HDI)? Cont…
Dual dimension of HD:
1) Formation of human capabilities: improved health,
knowledge and skills
2) Using the capabilities for productive work or leisure.
HDI: concerned with the first only and measures average
formation of human capabilities
•
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Human Development Index
What is the Human Development Index (HDI)? Cont…
• Composite index measuring key dimensions of human
capabilities
– HDI introduced in HDR of 1990, with an HDI for 1987,
and has since become universally known
– UNDP’s annual HD report eagerly awaited globally
• Technically the HDI involves calculating a series of indices
using primary data gathered from a number of different
international agencies (e.g. UN, World Bank, ILO, IMF
etc…).
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Human Development Index
What is the Human Development Index (HDI)? Cont…
Since the HDI was first published, it has gained wide
recognition as a powerful tool for advocating for and
monitoring human development.
The HDI is constantly being monitored and trends in HDI
performance are re-calculated with better information in
order to provide the best picture of human development
over time.
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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
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Human Development Index
• What is ‘Human Development’?
• - process of enlarging people’s choices
•
But choices are infinite in number and change overtime; if
so, how to measure HD?
• - Identify the most critical choices, measure achievements in
enlarging these choices, and aggregate these achievements into
an index, which can be used for inter-country comparisons.
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Human Development Index
• What are the most critical human choices?
• - Long and healthy life
• - Knowledge
• - Decent standard of living
• HDR 1990: Health, Education & Income – Most critical
dimensions of Human Development
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Human Development Index
• How to measure the critical dimensions?
– Issues related to data like measurement, collection and quality
should be minimum
– Each indicator should be universally valued; conceptual problems
should be minimum in terms of relevance and sensitivity
– Values of each indicator should be comparable across countries
•
What could be such measures?
 Longevity: Life Expectancy at birth
 Knowledge: Adult Literacy rate & Gross Enrolment Ratio in
primary, secondary and tertiary levels
 Std. of Living: per capita GDP (PPP US$)
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Human Development Index
• Statistical indicators used in HDI are
– life expectancy at birth
– adult literacy and gross enrolment in primary,
secondary and tertiary levels
– per capita GDP (PPP US$)
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Human Development Index
• Life expectancy at birth: # of years a new born infant
would live subject to the prevailing patterns of age specific
mortality rates
• Adult literacy rate: % of people ages 15 & above capable
of reading and writing (with understanding) a simple
statement.
• Gross enrolment ratio: # of students enrolled in a level of
education (irrespective of age) as a % of the population of
official school age for that level.
• GDP (PPP US $): GDP converted US dollars at a rate of
exchange that takes into account price differences across
countries.
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Human Development Index
• How to aggregate when the measures differ in units &
hence are not comparable?
• - Normalization w.r.t bounds:
• Normalized Score = Actual Value – Minimum Value
•
Range
• Where Range = (Maximum value – Minimum value)
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Goalposts for calculating the HDI
Indicator
Minimum value
Maximum value
Life expectancy
25 years
85 years
Adult literacy
0%
100%
Gross enrolment
0%
100%
GDP per capita
100 (PPP US$)
40,000 (PPP US$)
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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
GDP
Index
Dimensions:
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The HDI
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Calculating the HDI
HDI
1/3
PPP per capita
income with
declining weight
for higher
incomes
1/3
1/3
Life
expectancy
Education
1/3
Primary,
secondary
and tertiary
enrolment
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2/3
Adult
literacy
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The weights in the HDI
• The three dimensions in the HDI – health, education,
standard of living – weighted equally
• Equal weighting is not an accident; reflects a belief that all
three are equally important
• Assumption of substitutability – central, but sometimes
forgotten
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Calculating the HDI: an example (Zambia)
Life
expectancy
index
Literacy Enrolment
(2/3)
(1/3)
85 years 1
100% 100%
Education index
78.1
1
Income
index
40,000
HDI
1
0.68
49
780
41.4 0.27
25 years
0.27
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0%
0
0%
0
0.68
+
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0.34
0.433
0.34
100
(log scale)
+
1
0
0
= 0.433
20
Calculating the HDI: Afghanistan 2002
Life
expectancy
index
Literacy Enrolment
(2/3)
(1/3)
85 years 1
100% 100%
Education index
1
Income
index
HDI
Rank=173
40,000
1
44.9
44.5 0.33
25 years
0.33
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0.34
28.7
0%
0
0%
822
0
(log scale)
+
0.34
+
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3
0.36
0.346
0.36
100
1
0
0
= 0.346
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Calculating the HDI: Afghanistan 2005
Life
expectancy
index
Literacy Enrolment
(2/3)
(1/3)
85 years 1
100% 100%
Education index
1
59.3
43.1 0.30
25 years
0.30
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0%
0%
40,000
1
964
0
100
0.35
+
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0.36
1
0.345
0.34
(log scale)
+
HDI
Rank = 174
0.35
23.5
0
Income
index
0
0
= 0.345
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HDI Computation: Nepal 1996
Life Expect. ALR
55.0
# yrs school GDPPC (US $ PPP)
36.72 2.25
1186
Normalized Scores
Life expectancy= (55-25) / (85-25) = 0.50
Adult literacy rate: (36.72 – 0) / (100 – 0) = 0.367
# yrs. of schooling: = (2.25 - 0) / (15 - 0) = 0.15
Education Index = (2/3) x 0.367 + (1/3) x 0.15 = 0.295
GDP : {log (1186) – log(100)} / {log(10000) – log(100)} = 0.413
HDI = (1/3) (0.50 + 0.295 + 0.413) = 0.403
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Calculating the HDI
As for any index, the key thing is how to rank different
countries – the HDI uses minimum and maximum values
of average age expectancy, of average education level and
of average GDP per capita (using purchasing power parity
information so takes into account the cost of living in each
country relative to a base currency (the $US).
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Interpretation
• The simple rule of interpretation of the various
HDI measures is the higher the HDI the better the
country.
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Advantages:
– Tool for advocacy
– Ranking of areas
– Tool for research (if composite measure of development
is needed)
– More reliable tool than per capita income measures for
capturing improvement in human well-being
– Registers potential impact of over-development
– Politically appropriate – focuses on social sectors,
policies and achievements
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Break away from the GDP dominance
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HDR 2004
Critiques:
– Composite indicators may hide more than reveal
– Fundamental problem of weighting and
aggregation
– Sometimes mixing of output and input indicators: not
useful as evaluation tool
– No immediate uses for policy design: tailor made tools
required
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Critiques:
•
•
•
•
•
What about inequality?
Can it capture policy changes?
Ranking countries – unknown uncertainties
Why cap values?
Why have an index at all?
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Critiques:
• What about future generations – an environmental
degradation component?
• Political freedoms and rights?
• Culture
• Nutritional status
• Uncertainty
• Personal security
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Critiques that have been incorporated
• Absolute maximum and minimum values for each
indicator
• Supplementing literacy with a second education indicator
• Changing the adjustment of GDP per capita
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Political freedom
•
•
•
•
Political freedom index (PFI) presented in HDR 1991
Meant to be incorporated in the HDI
Caused technical and political controversy
Ultimately dropped because of the difficulties of
measurement
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Key data problems
• Literacy
– Conceptually and practically limited
– Definition and collection of literacy varies widely from
country to country
– Culturally specific: script systems and other factors
vary across the world
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Key data problems
• GDP per capita (PPP US$)
– Based on the ICP programme, limited to some 60
countries
– Based on regressions for other countries
– Imperfect measure but certainly better than exchange
rate terms
• Life expectancy
– Should measure “long and healthy life” but does not
take into account health, just length
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Why has the HDI been successful?
• HDI has become one of the best known and most used
indicators of development.
• Despite some remaining controversies, broadly accepted
and used by media, policymakers and academics
• What factors likely contributed?
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Policy relevance, and acceptability
• Underpinned by four aspects:
– Conceptual clarity that facilitates its power as a tool of
communication
– Reasonable level of aggregation
– Use of universal criteria and variables
– Use of standardized international data explicitly
designed for comparison
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Conceptual clarity
• Specification of the HDI derived from a clearly defined
concept:
– Dimensions and variables correspond to the concepts of
human development
– Meaning of variables intuitively understandable
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Reasonable level of aggregation
• HDI focuses on a set of universally -applicable core issues
• Aggregating too many issues tends to compromise
analytical usefulness and policy relevance
• Separate indices for e.g. gender empowerment, human
poverty
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Universal Acceptance
• Universally-relevant concepts and variables
• High degree of consensus that more is better in each of the
variables
• In contrast with e.g. election frequency, voter turnout,
share of largest party
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Universal Acceptance
• Uses data that are legitimized through the international
statistical system
– Of course, still data problems but data have been
standardized to ensure inter-country comparability
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Appropriate uses of the HDI
• Ordinal vs. cardinal – HDI value has a meaning but it is
not intuitive and should be used carefully
• Ranking
• Example: reversals in HDI? Arguably meaningful exercise,
if weights are accepted
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HDI Trend for India
Year of
Publication of
Global HDR
HDI Value
2005
2004
0.619 (2005)
0.595(2002)
128 (out of 177 countires)
127 (out of 177 countries)
2003
0.590 (2001)
127 (out of 175 countries)
2002
0.577 (2000)
124 (out of 173 countries)
2001
0.571(1999)
115 (out of 162 countries)
2000
0.563 (1998)
128 (out of 174 countries)
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HDI Rank
(Number of countries in parentheses)
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HDI & GEI for India: Departures from
UNDP Indices
UNDP-Indicators
Attainments
NHDR-Indicators
Life Expectancy at Birth
(LEB)
Longevity
Life expectancy at age 1 &
IMR
Adult Literacy Rate
combined with enrolment
ratio
Educational Literacy rate 7+ & Intensity of
attainment formal Education
Real GDP per capita in PPP $ Economic
attainment
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Per capita real consumption
exp. adjusted for inequality;
worker-popln. ratio in case of
gender equality index
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Human Development Index for India — Combined
States/UTs
1981
Value
1981
Rank
1991
Value
1991
Rank
2001
Value
2001 Rank
Andhra Pradesh
0.298
9
0.377
9
0.416
10
Assam
0.272
10
0.348
10
0.386
14
Bihar
0.237
15
0.308
15
0.367
15
Gujarat
0.360
4
0.431
6
0.479
6
Haryana
0.360
5
0.443
5
0.509
5
Karnataka
0.346
6
0.412
7
0.478
7
Kerala
0.500
1
0.591
1
0.638
1
Madhya Pradesh
0.245
14
0.328
13
0.394
12
Maharashtra
0.363
3
0.452
4
0.523
4
Orissa
0.267
11
0.345
12
0.404
11
Punjab
0.411
2
0.475
2
0.537
2
Rajasthan
0.256
12
0.347
11
0.424
9
Tamil Nadu
0.343
7
0.466
3
0.531
3
Uttar Pradesh
0.255
13
0.314
14
0.388
13
West Bengal
0.305
8
0.404
8
0.472
8
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India
0.302
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0.381
0.472
44
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HDI – INDIA & MAJOR STATES 2001
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Constant Marginal Utility of Income
Assumption: Rs 1 = 1 util at all levels
Scenario
I
II
III
Citizen
Income
Utility
Income
Utility
Income
Utility
A
100
100
200
200
150
150
B
100
100
0
0
50
50
Total
200
200
200
200
200
200
Per capit 100
100
100
100
100
100
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Declining Marginal Utility of Income
Assumption: Rs 1 = 1 util up to Rs 100
Rs 1 = (1/2) util above Rs 100
Scenario
I
II
III
Citizen
Income Utility
Income Utility
Income Utility
A
100
100
200
150
150
125
B
100
100
0
0
50
50
Total
200
200
200
150
200
175
Per capit
100
100
100
75
100
87.5
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Equivalent Incomes
Scenario
I
II
III
Total
200
200
200
Equivalent 200
Income
150
175
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Engendering the HDI: GDI and
GEM
• Attempt to explore gender dimension of human
development
• 1995: Beijing Conference and Global HDR
• Gender Development Index (GDI): simple measure of
inequality between men and women on components of the
HDI
• Gender Empowerment Measure (GEM): a positive
measure of progress by women in the economic,
professional and [email protected]
spheres
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India: Adult Literacy Rate - 1991 Census
State
Male
Female
Persons
Andhra Pradesh
50.35
26.43
38.51
Bihar
50.30
18.47
35.13
Gujarat
69.25
41.62
55.88
Haryana
64.17
31.23
48.92
Karnataka
63.78
37.46
50.94
Kerala
92.65
83.64
88.00
Madhya Pradesh
55.91
22.86
40.02
Maharashtra
74.36
45.33
60.37
Orissa
61.96
29.69
46.10
Punjab
61.29
43.39
52.90
Rajasthan
52.54
16.89
35.53
Tamil Nadu
69.92
43.87
57.02
Uttar Pradesh
53.95
20.99
38.62
West Bengal
67.98
42.98
56.19
INDIA
61.89
34.09
48.54
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The Gender-related development Index
(GDI)
• Same components as the HDI
• After calculating dimension index for each sex – they are
combined in a way to penalize gender equality (equally
distributed index)
• The GDI is calculated by taking the un-weighted average
of the three equally distributed indices
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The Gender-related development Index
(GDI)
Formula for the equally distributed index:
1
{[ Female. pop.share( female.index )]
1
1 / 1
 [male. pop.share(male.index )]}
 determines the size of gender equality in a
society. In the global HDR it is set at 2.
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Goalposts for calculating the GDI
Indicator
Minimum
Value
Maximum
value
Life expectancy
Female
27.5 years
87.5 years
Male
22.5 years
82.5 years
Adult literacy
0%
100%
Gross enrolment
0%
100%
GDP per capita
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$100(US)
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$40,000(US)
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GDI-related information: Afghanistan 2005
Indicators
Female
Male
(Step 1: Normalized
scores)
Share of population
0.483
0.517
Life expectancy at birth
43.0
(43.0 – 27.5)/60 =0.258
43.1
(43.1 – 22.5) / 60 = 0.343
Adult literacy rate
12.6
(12.6 – 0.0) / 100 = 0.126
32.4
(32.4 – 0.0 ) /100 = 0.324
Gross enrolment
41.8
(41.8 – 0.0 ) / 100 = 0.418
73.7
(73.7 – 0.0 ) / 100 = 0.737
Estimated earned income
(per capita GDP in PPP$)
478
1428
(log(478) – log(100))
/(log(40000 – log(100))=
(log(1428) – log(100))
/(log(40000 – log(100))=
0.261
0.444
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GDI-computation: Nepal 2000
Step 2: Education attainment index
Female
(2/3) x 0.126 + (1/3) x 0.418 = 0.223
Male
(2/3) x 0.324 + (1/3) x 0.737 = 0.462
Step 3: Equally distributed indices
Life expectancy index [0.483 x 0.258-1 + 0.517 x 0.343-1 ]-1 = 0.296
Education index [0.483 x 0.223-1 + 0.517 x 0.462-1 ]-1 = 0.305
Income index [0.483 x 0.261-1 + 0.517 x 0.444-1 ]-1 = 0.332
Step 4:
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GDI = (1/3) x (0. + 0. + 0. ) = 0.310
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GDI-related information: Nepal 2000
Indicators
Female
Male
(Step 1: Normalized
scores)
Share of population
0.502
0.498
Life expectancy at birth
59.8
(59.8 – 27.5)/60 =0.538
59.3
(59.3 – 22.5) / 60 = 0.613
Adult literacy rate
35.4
(35.4 – 0.0) / 100 = 0.354
65.8
(65.8 – 0.0 ) /100 = 0.658
Mean years of schooling
Estimated earned income
(per capita GDP in PPP$)
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2.2527
4.4522
(2.2527 – 0.0 ) / 15 = 0.150 (4.4522 – 0.0 ) / 15 = 0.297
911
1565
(log(911) – log(100))
/(log(40000 – log(100))=
(log(1565) – log(100))
/(log(40000 – log(100))=
0.369
0.459
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GDI-computation: Nepal 2000
Step 2: Education attainment index
Female
(2/3) x 0.354 + (1/3) x 0.150 = 0.286
Male
(2/3) x 0.658 + (1/3) x 0.297 = 0.538
Step 3: Equally distributed indices
Life expectancy index [0.502 x 0.538-1 + 0.498 x 0.613-1 ]-1 = 0.573
Education index [0.502 x 0.286-1 + 0.498 x 0.538-1 ]-1 = 0.373
Income index [0.502 x 0.369-1 + 0.498 x 0.459-1 ]-1 = 0.409
Step 4:
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GDI = (1/3) x (0.573 + 0.373 + 0.409 ) = 0.452
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Gender Empowerment Measure (GEM)
• Focusing on women’s opportunities rather than
capabilities, in terms of :
– Political participation (% share of
parliamentary seats)
– Economic participation (% share as in
managerial and technical positions)
– Power over economic resources (estimated
earned income, PPP US$)
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The Gender Empowerment Measure
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The Gender Empowerment Measure
• Equally distributed equivalent percentage (EDEP)
calculated for each dimension:
={[female popn. share(female index1-)] +
[male popn. share(male index1-)]}1/1-, where = 2.
• The EDEP for political and economic participation indexed
by dividing it by 50 assuming equal empowerment of the
sexes
• GEM = simple average of the 3 indexed EDEPs
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The Gender Empowerment Measure
Calculate dimension index and equally distributed
equivalent percentage (EDEP) for each dimension (like
GDI)
For political and economic decision making divide EDEP
by 50 (the ideal share women should have)
N.B. For political and economic decision making EDEP
can be calculated directly (as indicators are already %)
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The Gender Empowerment Measure
Income is not logged in the calculation
of the income index.
Again  = 2, for moderate penalisation
of inequality
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GEM: Nepal 2000
Indicators
Female
Male
Share of population
0.502
0.498
Share of participation
in local elections (%)
19.3
80.7
Share of participation
in professional job (%)
19.51
80.49
Share of participation
in admin. Job (%)
10.62
89.5
Estimated earned income
(per capita GDP PPP$)
91
1565
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GEM Computation: Nepal 2000
Step 1: Compute equally distributed equivalent % (EDEP)
Political
participation
Combined share (CS) = [ 0.502 x (19.3) -1 + 0.498 x (80.7)-1]-1
= 31.074
EDEI = 31.074 / 50 = 0.621
Economic
participation
CS Eco. Participation= [ 0.502 x (19.51)-1 + 0.498 x (80.49)-1]-1
= 31.331
EDEI = 31.331 / 50 = 0.627
Combined shares
of admin jobs
[ 0.502 x (10.65)-1 + 0.498 x (89.5)-1]-1 = 18.972
EDEI = 18.972 / 50 = 0.379
EDEI for
economic
participation
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(0.627 + 0.379) / 2 = 0.503
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GEM Computation: Nepal 2000 (contd.)
Step 1: Compute equally distributed equivalent % (EDEP)
Income
Normalized score for women’s income = (911-100) / (40000100) = 0.020
Normalized score for men’s income = (1565-100) / (40000100) = 0.037
EDEI = [ 0.502 x (0.020)-1 + 0.498 x (0.037)-1]-1 = 0.026
Step 2: EDEI aggregation
GEM
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( 0.621 + 0.503 + 0.026) / 3 = 0.384
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Afghanistan
• GEM could not be calculated for want of data: Nether
NHDR 2004 nor NHDR 2007
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Human Poverty Index (HPI)
• Measures the extent of deprivation in HDI’s three dimensions
• HPI –1 is calculated for developing countries
• HPI-2 is calculated for industrialized countries
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The deprivational perspective
• HDI and GDI focus on national averages (conglomerate
aspect)
– Conglomerate Perspective: Focus on advances made by
all groups in the society
• HPI focuses on the worst off (deprivation aspect)
– Deprivation perspective: Focus on the poor and the
deprived.
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Why separate indices
• Distinguishing between developing and OECD countries
recognized the relative nature of poverty
• Allows the use of richer, more appropriate data
• Different deprivations are more relevant in different
contexts
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The Human Poverty Index for developing countries
(HPI-1)
Dimensions
Indicators
• A long and healthy life
• Probability at birth of not
surviving until age 40
• Knowledge
• Adult illiteracy rate
• Access to safe water
• A decent standard of
living
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• Children underweight for
age
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The Human Poverty Index (HPI-1)
Where:
P1=Probability at birth of not surviving to age 40 (times 100)
P2=Adult illiteracy rate
P3= Average of people without access to safe water and children
underweight
As  rises greater weight is given to the dimension in
which there is most deprivation. =1 implies simple
average (perfect substitutability), =∞ tests HPI =
highest value (no substitutability). In he global HDR
=3, giving additional
but not overwhelming weight to
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areas of most acute deprivation
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 in the HPI formula
• As  rises greater weight is given to the dimension in which
there is most deprivation.
• =1 implies simple average (perfect substitutability),
• =∞ HPI = highest value (no substitutability).
• In the global HDR =3, giving additional but not
overwhelming weight to areas of most acute deprivation
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HPI Computation: Afghanistan 2005
Basic information:
Probability at
birth of not
surviving to age
40 (%) = 41.9
Adult illiteracy
rate (%) = 76.5
Chronic
malnutrition
among children
U5 (%) = 50
Population
without access to
safe water (%) =
68
Step 1: Deprivation index for std. of living
= (50 + 68) / 2 =59
Step 2: Computation of HPI
HPI
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{ (1/3) (41.93 + 76.53 + 593) }(1/3) = 62.3
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HPI Computation: Nepal 2004
Basic information:
Probability at
birth of not
surviving to age
40 (%) = 17.74
Adult illiteracy
rate (%) = 51.4
Chronic
malnutrition
among children
U5 (%) = 50.5
Population
without access to
safe water (%) =
20.48
Step 1: Deprivation index for std. of living
= (50.5 + 20.48) / 2 =35.49
Step 2: Computation of HPI
HPI
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{ (1/3) (17.743 + 51.43 + 35.493) }(1/3) = 39.6
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The Human Poverty Index for
OECD countries (HPI-2)
Dimensions
Indicators
• A long and healthy life
• Probability at birth of not
surviving until age60
• Knowledge
• Functional illiteracy rate
• Relative income poverty
• A decent standard of
living
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• Long term unemployment
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The Human Poverty Index (HPI-2)




1/ 
HPI  [1/ 4( P1  P2  P3  P4 )]
Where:
P1=Probability of not surviving to age 60 (times 100)
P2=Functional illiteracy rate
P3=Relative income poverty (population below 50% median
income)
P4 = Long-term unemployment
As  rises greater weight is given to the dimension in
which there is most deprivation. In the global HDR =3,
giving additional but not overwhelming weight to areas
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of most acute deprivation
Discrimination through the lens of the HDI
Life
expectancy
Literacy
Income
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Thank You
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