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Measuring living standard and : Human Development as an alternate measure

* Selim Jahan

Introduction

Historically, development was mostly various human development indices and perceived in terms of economic performance. We indicators evolved. The Human Development have too long been preoccupied with material Index (HDI) is the crown jewel of all those production and there has been a search for a indices and indicators. good measure of it. Surely, has been proved to be a good candidate and has The basic objective of the present paper is dominated the scene ever since. One can ask - to trace that evolution of the HDI, which was not why per capita income? First it is an attractive the outcome of some whims or arbitrary single indicator for assessing economic decision. Rather, it was the outcome of reactions performance. Second, it is also useful to for to needs and intellectual and policy demands and dividing the world into groups - rich and poor, also it represented some proactive action setting developed and developing – which are good the directions of new approaches. In tracing the criteria for allocating official development evolution, the paper would not only be confined assistance at the international level. Finally, good to historical or chronological developments, but reliable and solid data on national income it would also discuss the impacts of the HDI on accounts were available to calculate per capita policy-making, advocacy and future research. It income at a point of time and over time. will also attempt to identify the future challenges the HDI faces today. But over years, development perspective, its rationale and measures have changed. What Human Development Paradigm and the Need are these changes? With the introduction of the for New Measures concept of human development in 1990 and the publication of the first Human Development It is widely agreed that the driving force for Report (HDR), the development perspective the human development paradigm and the underwent a fundamental change. Today, measures of human development was guided by development is not about economic performance a vision. The vision was derived from what alone, but most importantly about people and Bernard Shaw (Melhuselah, 1920) has said : their well-being. Why should we shift from economic performance to people – what is the Some people see things as they are and rationale? This is because people are the And say `why’? ultimate objective of development. Economic We dream things that never were growth is not an end by itself, it is a means to And ask `why not’? enhancing people’s lives. The benefits of growth must be translated into lives of people. With that The `why not’ question has constantly context in mind, there were naturally new provided the intellectual drive to search for new searches for measures for human well-being and paradigms and new measures. Why not have a development paradigm that puts people at the centre of development? Why not have a measure * which may be as vulgar as GNP per capita, but The author is currently the Senior Adviser, Employment not as blind as it towards human lives? for , Bureau for Development Policy, Development Programme (UNDP). He has been the Deputy Director (1996-2001) of UNDP’s Human In 1990, with the introduction of the concept Development Report Office, and one of the core authors of of human development in the first HDR 1990, a the from 1992-2001. The views fundamental difference was made in the way expressed in the paper are those of the author’s own and they in no way represent the views of the organization he serves. development is perceived. The concept of human development emphasized that

1 in short, except that which makes life ? Development is about enlarging worthwhile.”1 people’s choices by enhancing their functionings and capabilities. No better rationale could be provided for new measures to monitor new perception of ? Development is of the people, for development – human development. And the the people and by the people. The search for such measures and their evolution first refers to over time concentrated on five aspects : formation and human resources development through nutrition, ? Identification of a single summary and . Development measure of human development – for the people stresses that the “just one number” - as Mahbubul benefits of economic growth must Haq put it, “which is of the same be translated into lives of people. level of vulgarity as the GNP – but Development by the people means a measure that is not as blind to that people must be able to social aspects of human lives as the influence the process, which affects GNP is.”2 their lives. ? Construction of other composite ? Development must be woven indices which would go beyond around people, and not people measures of average achievements around development. and assess aspects of gender inequality, deprivations in human And this changed perspective led to a development. fundamental difference in the way development is to be measured and monitored. Since ? Disaggregation of composite economic performance by itself cannot be the indices in terms of regions, states objective of development, neither can per capita or provinces, races or ethnic income be a measure of it. As has been rightly groups, rural-urban divide, which pointed out by Robert Kennedy : may serve as mirrors to societies to assess trouble spots. “Too much and too long, we seem to have surrendered community excellence and ? Identification of indicators, beyond community values in the mere accumulation composite indices, and their of material things. Our gross national innovative presentation which may product is the largest in the world, but that supplement composite indices and GNP – if we should judge our nation by that highlight various aspects of human – counts air and cigarette development. advertising, and ambulances to clear the highways of carnage. It counts special locks ? Search for new, improved, robust for our doors and the jails for those who and reliable data to reflect break it. It counts the destruction of our meaningful and consistent human redwoods and the loss of natural wonder in development indicators. chaotic sprawl. It counts napalm and the cost of a nuclear warhead, and the armoured cars for police who fight riots on our streets. …Yet The - a Single the gross national product does not allow for Summary Measure of Human Development the health of our children, the quality of their education, or the joy of their play. It does not The birth of the HDI started with a tension include the beauty of our poetry or the – should we aspire to have a measure which strength of our marriages; the intelligence of statistically pure, scientifically perfect and our public debate or the integrity of our logically absolutely correct or should we go for a public officials. It measures neither our wit measure which is not so pure, not so perfect, but nor our courage; neither our wisdom nor our learning; neither our compassion nor our 1 Quoted in Haq (1990) devotion to country; it measures everything, 2 UNDP (1999)

2 quite attractive both for advocacy and policy People would look at them respectfully, but making. In fact, in constructing the HDI, a when it came to using a summary measure of balance has been struck between the two – the development, they would still go back to measure should be quite rigorous, but it must be unadorned GNP, because it is crude and capable of drawing attention. convenient. Thus a summary measure like the HDI was needed as an alternative measure of Once that debate has been settled, the development, rivaling the GNP. In fact, the HDI criteria for that measure was easy. In fact, five can be seen, in the words of Prof. Sen, “as a criteria for such a measure were in the forefront : deliberately-constructed crude measure, offered as a rival to the GNP (an overused and oversold ? Simplicity as simple is powerful and index that Mahbub wanted to supplant ”. 4 has more predictive potential ? Universality with a focus on basic This is precisely what the HDI is supposed capabilities and thus having to do. But unfortunately, over the years, with applicability to both developed and their zealousness particularly with country developing countries rankings and the competition that they create, ? Sufficient attractiveness drawing people have attributed to HDI things that it does attention of policy makers, academics, not stand for. It is definitely not a representation development activists etc. It should of `happiness’ or `the best place on earth to represent a synthesis number and live’, nor it is a comprehensive measure of all people should be emotionally attached aspects of human development. As has been to it. mentioned above, it has a limited scope and it ? Pluralism and not mono-centricity. should be seen in that scope and people should ? Synthesis with a focal attention among not lose sight of the bigger picture of human the information breadth of human development. development Like any other concept in any other The final criterion needs some further discipline, the concept of human development is elaboration. The Human Development Index bigger and broader than any of its measure. This (HDI) is a measure of average achievement in is because any proposed measure for any concept basic human capabilities. Based on three cannot fully capture the concept. This is true of components, viz. indicators of longevity, the HDI as well. It is just a summary measure of educational attainment and a decent standard of human development based on three basic living, it is not exclusively focused on economic dimensions of human development and thus it opulence (as the GNP is), and it certainly has does not and cannot present a comprehensive served to broaden the empirical attention in picture of human development in any country or assessing the process of development. in any situation. To have such a comprehensive In his memorial lecture on the sad demise picture, we have to supplement the HDI with of Mahbubul Haq in 1998, Nobel Laureate Prof. other useful, important and rich indicators of said, “I did not, I must admit, human development – a number of which initially see much merit in the HDI itself, which, appears in each year’s Human Development as it happens, I was privileged to help him Report. Thus only by complementing the HDI devise. I had expressed to Mahbub considerable with information from a broader human skepticism about trying to focus on a crude index development accounting, we can have a full and of this kind, attempting to catch in one simple comprehensive picture. But often people forget it number a complex reality human development and concentrate their focus and energy sole on and human deprivation. Why give prominence, it the HDI, the cost of which is that they fail to was natural to ask, to a crude summary index appreciate all the other rich information on that could not begin to capture much of the rich human development. information that makes the Human Development Reports so engaging and important.” 3 If a metaphor is used, then the human development accounting is a house and the HDI But the conviction was that the dominance is the door to the house. It is wrong to mistake of GNP could not be broken by any set of tables. the door to be house and it is equally a wrong to

3 Sen (1999) 4 UNDP (1999)

3 stop at the door and not to enter the house and value is identified. This shows appreciate it. the path covered by the society in the selected variable. Second, The analytical framework of the HDI can this difference is shown as a be discussed with respect to four issues related to proportion of the difference of the HDI : its focus, its variables, and its formula. the maximum value and the minimum value – a difference, ? Focus : The focus of the HDI is to measure which represents the total path to average achievements in human be covered by every society in development in a society. It builds on three the variable in question. basic dimensions of human life – a long and healthy life, knowledge and a decent Thus the normalized variable, . The HDI measures basic which is a pure number, shows human capabilities in these dimensions. for a particular variable, the path covered by a society as a Three issues can be raised with regard to its proportion of the path to be focus. First, does the concentration of the covered. Thus if a society for a HDI on three basic dimensions of human particular variable remains at the life mean that other aspects of human life minimum, the normalized value are unimportant. The answer is : no. It just of the variable will be 0 and if it means that the basic capabilities are has attained the maximum value, essential for human well-being and when the normalized value of the they are achieved, doors for other variable will be 1. Thus the scale opportunities open. Aspects like human is set for each variable between 0 rights, participation, non-discrimination, and 1. even though are not captured in the HDI, are essential for human development. When Scaling and the normalized value significant levels of human development are are required for two reasons. achieved, as measured by the HDI, in three First, the variables included in basic dimensions of human life, the doors the HDI have different units. for participation, ensuring security etc. open Thus, is in years, up for all people. adult rate is in percentages and the GDP per ? Variables : To represent the dimensions of capita is in PPP$. By human well-being included in the HDI, the normalization, one gets rid of following variables were chosen – life units and derives pure numbers. expectancy at birth for a long and lengthy Such transformation is needed life, educational attainment in terms of adult for additive purposes while literacy rate and combined gross enrollment constructing a composite index. ratio at primary, secondary and tertiary Second, scaling enables one to level and GDP per capita (PPP$) for a carry on comparisons as to how decent standard of living. There are three in each dimension countries have critical issues with regard to variables. fared relatively and what are the unfinished paths. ? Scaling : In constructing the HDI, each variable is normalized ? Weights : In the composite through a process of scaling. In index, the variables of life this process, for each variable, a expectancy at birth, educational maximum and a minimum value attainment and GDP per capita are selected and the difference are given equal weights. They are between the maximum and the given equal weights not because minimum value defines the scale. of simplicity, but because of the The normalized variable is philosophical reasoning that all constructed in the following way. the dimensions included in the First, the difference between the HDI are equally important and observed value and the minimum desirable in their own rights for

4 building human capabilities. income is $10,000 is not equally Furthermore, there is no important as an input to human assumption of substitution development as an extra dollar among those dimensions or the when the income is $100. variables representing them. Therefore, such a question as ? Formula : Once all the variables are what is the amount of income normalized with all the necessary that can be given up to get an adjustments, a simple mean of them is taken, additional year of life is which is the HDI. The maximum value of irrelevant in the HDI framework. the HDI is 1 and the minimum value is 0. If there were substitution among the dimensions or the variables, Refinements in the Methodology of the HDI then equal weights would not Over Time have made sense. But the absence of any substitution From the outset of its introduction in 1990, makes the assumption of equal the HDI caught the attention of academics, weights defensible. In the HDI, researchers, policy makers, and development there is, however, an assumption activists. It was praised for its broader of transformation – education is perspective of human well-being, yet it was transformed into knowledge and seriously scrutinized in terms of its analytical enhances human capabilities, framework, methodology, data etc. There have income is transformed into other been several academic critiques of the index, dimensions of human reviewing its internal consistency, robustness, development not captured in the predictive power.5 In academic journals, articles HDI. focusing on the index started to appear. Most of these articles were constructive criticism of the ? Treatment of income : Income is HDI and suggested different refinements to the a means to human development, methodology of the index. Policy makers were not an end by itself. This dictates also interested in seeing whether in diverse the way income enters into and is situations the index can still be applied as useful being treated in the HDI. Income policy guide. Development activists were enters into the HDI not in its own concerned with more innovative use of the index right, but as a proxy for all the for advocacy purposes. dimensions not included in a long and healthy life and Responding to such diverse requirements knowledge. The issue here is needed constant refinements of the index – both how income is transformed into in terms of methodology as well as search for enhancing human attainment in better data. Needless to say, the Human those areas. Development Report Office (HDRO) responded to this challenge quite effectively, leading the There is also the notion that one research in the area of refining the index and also does not need unlimited income looking for more robust data. Nobel laureate for enhancing human Amartya Sen, one of the architects of the HDI, development. Given how income along with Professor Sudhir Anand led this effort is transformed, even with little on behalf of the HDRO.6 As a result, the index income, a lot can be achieved in underwent a series of analytical and human development. This methodological refinements. perspective and also the concern that income should not dictate When the HDI was first introduced in the the value of the HDI has led to Human Development Report 1990, it had the adjusting income as it enters the following five characteristics. First, the HDI was HDI. Thus as income increases, constructed from a deprivational perspective. its value is adjusted downwards The composite of average deprivation was through mathematical treatment

before it enters into the HDI. 5 Raworth (1998) Thus an extra dollar when the 6 Anand and Sen (1994 and 1998)

5 identified first going through deprivations in the goal posts. Second, since the each variable and then the HDI was represented observed maxima and minima change as 1 minus composite average deprivation. It from year to year, representing reflected a round about way of deriving the HDI. changes in goal posts themselves, any Second, in the educational attainment meaningful inter-temporal comparison component, there was only one variable – adult was not possible. literacy rate. Third, in terms of discounting income, income, irrespective of levels, was To deal with these issues, in 1994, logged. Fourth, for each variable, the maximum fixed maxima and minima were and minimum were observed ones. Fifth, the introduced. These were no longer HDI was constructed only for 130 countries.7 observed, but rather based on the trends of the variables, and their Over the years with better understanding of probable values in next 25 years.8 issues, academic reactions, policy responses, Fixing the maxima and minima for demands from development activists, the HDI variables made it possible to carry out has undergone a series of methodological meaningful trend analysis of the HDI. refinements. The major refinements are the following : ? Treatment of income : Even though in 1990, income was logged in the HDI, ? Direct calculation of the HDI : for the next eight years, income above Starting from 1991, the HDI began to a cut-off point was adjusted drastically be calculated directly to avoid the using a highly regressive formulation. round about way and also to give it a Three observations are pertinent to this positive spin. That tradition still adjustment. First, the cut-off point was continues. the average world income on the assumption that every person as a ? Educational attainment variable : In member of the global community the HDR 1991, mean years of should have at least this level of schooling was added as a second income for building basic capabilities. component to adult literacy to form the Second, the adjustment was so drastic variable for educational attainment. A that $35,000 (above the $5,000 cut-off second variable was included to have a point) is reduced to $321 by this sense of educational attainment of adjustment. Third, this formulation people not covered by adult literacy. punishes middle income countries Adult literacy was given two-thirds unduly. weight and mean years of schooling one-third weight, as adult literacy is In order to rectify all these, the more representative of stock variable formulation of logging income all for attainment. But the mean years of through was again introduced in 1999. schooling were constructed in a fuzzy The advantages of this approach are it way and some of the data do not seem is not as drastic as the other one and it to be reflecting the reality. Therefore, does not unduly penalizes middle in 1995, it was replaced by combined income countries as the asymptote gross enrolment at primary, secondary starts quite late.9 and tertiary level. It is necessary to mention that along with ? Maxima and mimina : Till 1994, in these methodological refinements, there were normalizing variables, observed also attempts to generate more reliable, maxima and minima were used. It consistent and robust data over time. In this area created to serious problem. First, there also, the HDRO played a leading role. It voiced was no way of knowing whether the the need for better and relevant data in different changes in the HDI value of a country for a, it interacted with various UN agencies and are because of its improved international organizations to demand the performance or because of changing

8 UNDP (1994) 7 UNDP (1990) 9 Anand and Sen (1998)

6 production of such data and it impressed on the concentrate on broader dimensions national statistical offices to generate them. It of human well-being. In many parts should be stressed at this point that the National of the world, new and emerging Human Development Reports (NHDRs) played a development concerns have started major role in becoming a good depository for to dominate the development innovative and disaggregated data at the country dialogue. Thus in countries like level. Without improvements in data the and South , the methodological refinements in HDI could not implications of HIV/AIDS for have been tested. development became a serious issue. In March 2001 the President In order to be credible to its users and also of Botswana made a decision to to have a productive discussion on all the provide free access to ARV drugs changes, all the methodological changes as well for the 17% of the country’s changes in data series or sources should be with HIV/AIDS. The properly and timely documented. In recent times, erosion of basic social services in the HDRs and the HDRO have been quite careful Eastern and the CIS has in providing such documentation, enhancing the been dominating the policy transparency of the exercise. This has led to very dialogues in that region. And the constructive debates on the index and the data human impact of the East Asian providing useful guidance to future work on it. crisis drew the attention of policy makers in the 1990s. Achievements of the HDI The focus of development on basic When the HDI was first introduced in human concerns has also changed 1990, its proponents did not have the slightest the ways resources are allocated. In idea that its would go this far – having impacted , with the publication of its policy decisions in significant ways, being used first NHDR, when Upper Egypt as a major advocacy tool, becoming focus of was found to be lagging behind the serious academic inquiries. Over the years, the Cairo region in every areas of HDI has achieved a lot, but its five major human development, it led to a distinctive achievements are : serious policy discussion between the Governors of 17 provinces in ? It has alluded that income is not the the country on the issue of resource sum total of human life and thus allocation. And it changed the per capita income cannot be the entire resource allocation pattern, measure of human-well-being. This with more funds now going to perspective has changed the way Upper Egypt. development is looked at and analyzed and today development is It has led to asking questions and viewed broader than economic identifying reasons for shortfalls in growth. As a result, development human development. In the with a human face has no longer with the publication of remained rhetoric; rather the new its 1997 NHDRs, the issue of paradigm has had implications for allocating a threshold amount for policies, resource allocations and basic social services at the level of institution building. local governments was identified as a crucial factor for development. So Thus macroeconomic polices of there was a presidential directive various developing countries in requiring all local governments to , Africa and devote at least 20% of domestic started to explicitly take various revenue to human development issues of human development into priorities. consideration. Policy makers in these countries have moved away At the global level, issues are now from growth-centric perspective of being explored as to whether development and have begun to bilateral aid can be allocated on the

7 basis of HDI, or the core funds of highlight the issue of inequality in multilateral agencies can be based that country and demand measures on the index and so on. to reduce it. is now constructing HDI at the state, In many countries, with the HDI at district and municipal level. Such the centre stage, new institutions exercises have been carried out in have evolved to move forward the countries like , , agenda for human development. In , etc. , a new ministry for human development was established to The HDI has also been used as a give proper priority to human strong advocacy tool at different development. international and global events. In 1995, at the ? The HDI has started a desirable Conference on Women in , healthy competition among disaggregated HDI in terms of countries to surpass its neighbours gender has been used by NGOs to or favourite competitors in highlight the disparities women rankings. With the publication of face both in terms of capability each year’s HDR, the first thing building, but more so in the area of that draws attention of different opportunities. At the Habitat quarters is the ranking of a relevant Conference in in 1996, the country vis-a-vis the ranking of its differences in rural and urban HDI favourite neighbour. Thus In in many countries have been , people look out for its emphasized by various institutions ranking as compared to that of of civil society to highlight the . In India, its relative disparities in housing. ranking vis-à-vis that of is what matters most. Such ? The HDI has led to various competition force the policy exercises for monitoring and makers to review as to why their evaluation and also for generation country is lagging behind its of more systematic and reliable favourite neighbour and induces data. At the global level, whether in them to undertake policies to the area of monitoring Millennium overcome the relevant Development Goals or the UN- shortcomings. It implies a thorough wide Common Country examination of its development Assessment (CCA) Framework, the strategies, a review of its priorities HDI has been used to provide and an assessment of its resource contextual information. In , allocation patterns and guiding the Ministry of Planning, with the each of these toward basic human help of the HDI, has started to concerns. monitor human development and incorporate it in its indicators for ? It has served as an instrument of strategic planning. The HDI has public communication with a also led to mobilization of new and strong advocacy role and it has more systematic data both at the contributed significantly to policy global and national level. debates and dialogues. Therefore, NGOs and institutions of civil ? It has resulted in serious academic society in different countries have research and empirical studies on used it for highlighting their the issue of theoretical refinements demands and pressing the and statistical sophistication of the governments on various issues. The HDI. The academic research not regional disparities as shown by the only concentrated on a substantive disaggregated HDI in the Brazilian review of the index – its NHDRs have prompted institutions consistency, statistical properties, of civil society in that country to its robustness, its predictive power,

8 but also suggested various knowledge and a decent standard of refinements in its present form. living. But the HDI in no way Some of the research has also undermines the fact that other aspects concentrated on the issue of of human life, such as participation, including other dimensions of political freedom, , are human development in the index. equally important. But the rationale for Yet some others reviewed the concentrating on three basic possibility of using other dimensions of human lives is that if innovative indicators to represent these three basic capabilities are the dimensions represented in the achieved they would open up HDI. In fact, a number of NHDRs opportunities in other dimensions of and sub-national HDRs (e.g. the human lives valued by people. HDR of Madhya Pradesh in India) experimented with indicators more ? The HDI does not provide a relevant to the Madhya Pradesh comprehensive picture of human context to reflect the dimensions of development in any situation, as it is the HDI. just a summary measure. Nor can it be substituted for all the rich information More than dozen graduate that is contained in the HDRs in dissertations have been done and various tables on human development scholars have written academic indicators. When the HDI is articles on various aspects of the supplemented with this rich HDI in different academic information, only then one get a fuller journals.10 assessment of human development situation in any society. Some of the studies have also specifically assessed the data issues Going beyond the HDI and how those can be improved. Even though the HDI, within a few years But while one appreciates what the HDI after its introduction, was widely appreciated as has achieved, it is equally important to have a a major policy instrument and a useful policy clear idea as to what HDI is not. It would help in tool, it was recognized early on that it is a not misusing or abusing the index. While the measure of average achievements in human HDI should not be denied the recognition that it development. It can neither reflect distributional deserves, but at the same time it should not be aspect of development, particularly the issue of used to highlight things that it does not stand for, inequality, nor can it measure deprivational nor should it be criticized or undermined for the aspect of development. things that it does not or cannot claim to capture. The HDI is none of the following : Over the years, attempts were made to rectify the situation. First, in 1995, composite ? The HDI is not a perfect index, which indices were constructed to account for gender fully captures the concept of human inequalities in human development. Second, in development. In fact, any concept is 1997, a composite index was proposed and broader than its proposed constructed for measuring the multi- measurement, because the dimensionality of poverty. Third, these measurement cannot fully reflect the composite indices were disaggregated in terms of concept. Thus there is no pretension regions, states, provinces, by gender, races or that HDI fully and perfectly captures ethnic groups, along the rural-urban divide. the whole of human development.

? The HDI does not take into account Gender-related Development Index and Gender every aspect of human development. It Empowerment Measure focuses on three dimensions of basic capabilities – a long and healthy life, A Gender-related development Index (GDI) and a Gender Empowerment Measure 10 Raworth (1998) (GEM) emerged in 1995 to take into account

9 gender inequality in achievement of basic (HPI) capabilities (GDI) and gender inequality in opportunities in economic and political areas In 1997, a composite measure for multi- (GEM). dimensional poverty – the Human Poverty Index (HPI) - was introduced. The idea was first, to The GDI measures achievements in the look at human development from a deprivational same dimensions and the variables as the HDI aspect and second, to assess how the benefits of does, but takes into account inequality in human development – as measured by the achievements between women and men.11 The average achievements represented by the HDI - greater the gender disparity in human are distributed. People sometimes argue that (1- development, the lower is a country’s GDI HDI) is a measure of deprivation, which is not compared to its HDI. The GDI is simply the correct. It basically measures shortfalls in HDI, or adjusted downwards, for gender average achievements, but it cannot reflect the inequality. The GEM indicates whether women above two issues. The HPI was constructed both are able to actively participate in economic and for developing countries (HPI-1) in 1997 and for political life. It focuses on participation, industrial countries (HPI-2) in 1998. measuring gender inequality in key areas of economic and political participation and The HPI measures deprivations in basic decision-making. It thus differs from the GDI, an human development in the same dimensions as indicator of gender inequality in basic the HDI plus the aspect of participation or social capabilities. inclusion.12 For HPI-1, the deprivation in long and healthy life is measured by percentage of The exercises with the GDI and GEM have people born today, but are not expected to established that greater gender equality in survive to age 40, deprivation in knowledge by building human capabilities or providing adult illiteracy rate, and deprivation in economic opportunities to women does not depend on provisioning by the percentage of people lacking income level or stage of development. And it can access to health services and safe water and be achieved across a range of cultures. percentage of children under five who are malnourished. Two observations may be Both the GDI and the GEM have served pertinent. First, for economic provisioning in useful purposes : developing countries, public provisioning may be more important than private income. At the ? The GDI, through its construction, same time, more than four-fifths of private incorporates the degree gender income is spent on food. Thus in developing inequality aversion of the concerned countries, lack of access to health services and society and as such reflects social safe water and the level of capture choices in this regard. deprivation in economic provisioning more practically and meaningfully than other ? Both the GDI and the GEM have been indicators. Second, the absence of a suitable used extensively by women’s groups, indicator and lack of data prevent the HPI-1 from feminist activists and civil society reflecting deprivation in social inclusion in movements as a useful advocacy tool. developing countries. They have been used in the Fourth World Conference of Women in For the HPI-2, the deprivation in long and Beijing in 1995. healthy life is measured by the percentage of people born today, but are not expected to ? Policy makers have found them survive age 60, deprivation in knowledge by extremely relevant for formulating percentage of adults functionally illiterate, policies and programmes with pro- deprivation in economic provisioning by income women biases. poverty incidence (as private income is the most important source of economic provisioning in developed countries) and deprivation in social inclusion by long-term unemployment.

11 Anand and Sen (1995) 12 Anand and Sen (1997)

10 The HPIs have served a number of as well. Second, in many countries, purposes : disaggregation of human development composite indices and indicators has been carried out at the ? However imperfect, they provided a district level (Venezuela) and at the municipal single measure of the level (Brazil). These have provided new insights multidimensionality of poverty. They for local level policies and programmes. Third, have also established that if income is in many countries, disaggregation of composite not the sum total of human lives, lack human development indices has had important of it cannot be that sum total of human impacts on policy dialogues and decisions. deprivation either. They have been effective in showing the distribution of The HDI – Looking Forward the average achievements of human development, as reflected in the HDI. Nearly a decade after its introduction, the HDI has established itself as a major measure of ? They provided recognition to the fact development. Its advocacy role, its importance that poverty is not only a southern for policy guidance and its potential for inducing phenomenon, it is very much a further research are well recognized by now. But northern problem as well. to continue to play a constructive and provocative role in all these areas in future, it has ? HPI-2 enabled us to differentiate the to look forward and be subjected to constant human development situation among scrutiny, refinements and innovation. In coming countries whose average achievements years, it has to address the following issues : in human development are extremely close. A high human development ? Keeping it simple. The HDI is a measure of does not automatically imply low average achievements in basic human levels of human deprivation. development. Its universality, advocacy value and policy relevance derives from the Disaggregation of Composite Indices – Mirrors fact that it is simple. It should be kept to Societies simple. In this regard, two basic points may be useful. First, there are certain aspects of Disaggregation of all the composite indices human lives and well being where has provided a mirror to societies to see the real qualitative assessments may be more picture prevailing. The composite indices have meaningful. Such areas may cover human been disaggregated in terms of regions, states or rights, culture, political freedom etc. provinces, races, ethnic groups, rural-urban Experiences with the Human Freedom Index divide etc. In a number of cases, these exercises in 1991 and the Political Freedom Index in have been carried out by individual researchers, 1992 have clearly shown that quantitative in other cases, studies have been commissioned assessments based on too much subjective by the HDRO.13 But in majority of instances, judgement may be misleading, and such exercises have been spearheaded by the unproductive. Every aspect of human life National Human Development Reports cannot be and should be given a number, (NHDRs). All these exercises have highlighted particularly that number represents a total disparities in human achievements or subjective valuation. Second, Even in the deprivations across races, ethnic groups, regions, area of quantitative indicators, renewed states and provinces etc. attempts should be made to explore new possibilities in such areas as environment, Three observations on the disaggregated , and governance. The idea is composite indices are pertinent. First, disparities not to reflect all these in the HDI, because in human development are not exclusive to that would overburden the HDI and destroy developing countries. There are serious human its simplicity and predictive power. For development disparities in the developed world example, in earlier years, attempts were made to Green the HDI, but it was soon

13 found that such a measure cannot be Two earliest individual research work in this area universal as there is no common set of are Akder (1990) and Shiva Kumar (1990). For studies commissioned by the HDRO, please see UNDP environmental indicators which may capture (1994).

11 the realities of both developed and Reports contains, in extensive collections of developing countries. tables, a wealth of information on a variety of social, economic and political features ? Refining the educational attainment that influence the nature and quality of variable : Over the years, various ways human life”.14 were explored to refine the educational attainment variable. There were serious Second, policy twists to basic human methodological and data problems with development indicators can guide the mean years of schooling; combined gross policy-makers. Thus for example, a primary, secondary and tertiary enrolment traditional indicator like military ratios have been viewed by many as not so expenditure as a percentage of GDP may be meaningful. There is also the issue of of little policy guide. This is because just combining a stock variable (adult literacy) looking at such figures there is no way of and a flow variable (combined enrolment determining whether military expenditure at ratio). Suggestions have been made to come 5% of GDP is worse than 2% of GDP. If the up with such variables as years of school GDP in the first case is $100, while in the expectancy. But to construct data for years second case, it is $10,000, then in absolute of schooling, one would need data on age- terms, more resources are spent on military specific net enrolment ratio, which does not in the second case, then at the first. But the exist. point is that the percentage figures do not convey that information. On the other hand, ? Short-term changes in human development : if military expenditure is shown as a ratio of The HDI is composed of stock variables expenditures on health and education, and thus cannot capture the short-run immediately, it can show the misplacement changes in human development in a of priorities in terms of resource allocation country. It is also not very sensitive to and can be a guide to policy-makers. policy changes and as such may frustrate the policy makers. The Human Third, if the users of the human Development Report Office is engaged in development indicators do not find the collaboration with a number of UNDP presentation of data attractive, then the Country Offices to come up with short-term purpose of using them for advocacy, policy indicators that will reflect dialogues and social debates will be lost. perspectives of average achievements, deprivation and inequalities. These ? New, improved, robust and reliable data : indicators would be more sensitive to Whatever innovative indicators and indices policy changes and would also be able to are proposed for monitoring human monitor short-term progress. A proposed development, one cannot go far if reliable, structure of such perspectives has been consistent, robust and timely series of data presented in the Human Development are not available. Today, economic data are Report 2000. more readily available, but not social data. More up-to-date data are available at the ? More innovative indicators : The value and country level, but not internationally relevance of the HDI is enhanced if the rest standardized data at the global level. of the human development accounting is Sometimes snapshot information may be strengthened. Since the HDR in 1990, there obtained, but not panel data to consistent have been continuous searches for relevant time series. In every case, as secondary and meaningful indicators on various users of global data, the HDI is always aspects of human development, constant constrained. experiments to provide them a policy twist, innovative approaches to present them in But over the years, serious efforts have, user-friendly ways. All these were guided by however, resulted in three things. First, more the three considerations. national data have been made available to First, human development is broader than respective UN agencies and international the composite indices and as Prof. Sen organizations in a more timely fashion – observes, “In contrast with the coarse index

of HDI, the rest of the Human Development 14 UNDP (1999)

12 thus reducing the lag between the methodological issues as well as statistical availability of data at the national and the sophistication. international level. Second, newer search are being carried out at the national levels for Monitoring human development is more social data, more disaggregated data important for assessment, policy making and and more innovative data. National HDRs enhancing lives of millions. The present state of have played a role in this respect. And third, art in monitoring is evolving slowly but surely. there is now more emphasis on building the Research is going on – both within the Human statistical capability at the country level and Development Report Office and in academic and the international community is supporting research institutions. We have advanced quite a that process. lot, but we have miles to go.

But much more needed to be done. Otherwise one cannot do a number of desired refinements. For example, if one wants to have years of school expectancy as an indicator for educational attainment in the HDI, one cannot do it just because there is not age group specific net enrolment ratio within the primary school age group. If there were gender disaggregated income data, one could have constructed a more meaningful GDI and GEM. The absence of any reliable data on the issue of access to health services has forced the estimate of HPI-1 to rely on the other two variables included in economic provisioning. Non-availability of data has restricted the estimates of GDI, GEM and HPI-1 to less than 100 countries.

International organizations, working closely with country statistical offices and interacting within themselves can build networks for initiating new surveys, data collecting mechanisms, putting a framework for reliable and standardized data and publishing them regularly.

Conclusions

The HDI as a more meaningful measure of development is now quite well-established. Its value, importance and relevance are also recognized. Does it mean that its imperfections are to be overlooked? Of course, not. It shares the shortcomings of other composite indices. But the point is that the GDP is also a major composite indicator. If we can live with GDP for nearly 50 years, the HDI, which is only 12 years old, deserves a chance. All the human development composite indices and indicators including the HDI are in the process of evolution. With regard to the HDI, as has been pointed out, refinements have been made over the years both with regard to

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