WARM-UP

What is an index?An index is a composite of indicators that produces a single calculation which can then be ranked.

THE BODY MASS INDEX

THE WIND CHILL INDEX

THE BIG MAC INDEX

OTHER COMMON INDEXES

ECONOMIC, DEMOGRAPHIC & SOCIAL INDEXES

Economic, demographic, and social indexes are like those we just talked about except they include data (such as income, educational attainment, health, life expectancy, crude birth rate, etc.) rather than wind speeds, body weight, and the like.

A Look at the Human Development Index (HDI)

The Human Development Index (HDI)

…is the best known composite index of social and economic well-being…

THE CONCEPT OF HUMAN DEVELOPMENT

"The basic purpose of development is to enlarge people's choices. In principle, these choices can be infinite and can

change over time. People often value achievements that do not show up at all, or not immediately, in income or growth figures: greater access to knowledge, better nutrition and health services, more secure livelihoods, security against

crime and physical violence, satisfying leisure hours, political and cultural freedoms and sense of participation in community

activities. The objective of development is to create an enabling environment for people to enjoy long, healthy and

creative lives."

Mahbub ul Haq -- Founder of the Human Development Report

HOW THE UNDP MEASURES HUMAN DEVELOPMENT

• The HDI consists of three equally weighted components:

(1) “A long and healthy life” (Health)

(2) “Knowledge” (Education)

(3) “A decent standard of living” (Wealth)

DECONSTRUCTING EACH MEASURE

Each component of the HDI is measured in the following way:

Health

Measured by life expectancy at birth.

Education

Measured as a combination of adult literacy (with two-thirds weight) and gross enrollment (with one-third weight).

Wealth

Measured by GDP per capita.

CALCULATING HDI:THE UNITED STATES

In the United States, in 2005:

The average life expectancy was 77.9.

The adult literacy rate was 99%.

The gross enrollment rate was 93.3%.

The GDP per capita was $41,890.

The HDI was .951.

The HDI ranking was 12th.

1 Luxembourg ($80,471) 11 United Kingdom ($35,051)

2 Ireland ($44,087) 12 Finland ($34,819)

3 Norway ($43,574) 13 Belgium ($34,478)

4 14 Sweden ($34,409)

5 Iceland ($40,277) 15 Qatar ($33,049)

6 Switzerland ($37,369) 16 Australia ($32,938)

7 Denmark ($36,549) 17 Singapore ($32,867)

8 Austria ($36,031) 18 Japan ($32,647)

9 Canada ($35,494) 19 Germany ($31,095)

10 Netherlands ($35,078) 20 Italy ($30,732)

United States ($43,444)

The IMF’s GDP Per Capita Rankings (2006)

Purchasing Power Parity (PPP)

The IMF’s GDP Per Capita Rankings (2006)

Purchasing Power Parity (PPP)

The question is: how well is the United States

using its income to bring about human development?

The UNDP’s HDI Rankings (2005)The UNDP’s HDI Rankings (2005)

1 Iceland (.968) 11 Finland (.951)

2 Norway (.968) 12

3 Australia (961) 13 Spain (.949)

4 Canada (.960) 14 Denmark (.949)

5 Ireland (.959) 15 Austria (.948)

6 Sweden (.956) 16 United Kingdom (.946)

7 Switzerland (.955) 17 Belgium (.946)

8 Japan (.953) 18 Luxembourg (.944)

9 Netherlands (.953) 19 New Zealand (.943)

10 France (.952) 20 Italy (.941)

United States (.951) (.914 today 5th)

Is the HDI Enough to Measure a Country’s Level of Development?

According to the UNDP, the answer is:

“Not at all.”

“The concept of human development is much broader than what can be captured in the HDI, or any other composite indices…”

“The HDI and the other composite indices can only offer a broad proxy on some of the key the issues of human development…”

“A fuller picture of a country's level of human development requires analysis of other human development indicators and information.”

A SAMPLING OF OTHER DEVELOPMENT

INDEXES

• The Economist’s “Quality of Life” Index• UNICEF’s “Child-Welfare” Index• The “Happy Planet” Index• The UNDP’s “Human Poverty Index”• The UNDP’s “Gender Empowerment Measure”• International Living’s “Quality of Life” Index• The “Global Peace Index”• Freedom House’s “Freedom Rankings”

ECONOMIC INDICATORS

Gross Domestic Product

-Total value of the output of goods and services produced in a country annually

-per capita + GDP divided by population (does not measure actual distribution of a nations wealth)

ECONOMIC CONT.

Types of Jobs

-Primary (raw material production)

-Secondary (manufacturing)

-Tertiary (services)

CONSUMER GOODS AND SERVICES

-Play a central role in MDC life NOT in LDC’s

-motor vehicles

-Telecommunications (cell, phone, internet, etc.)

PRODUCTIVITY

Efficiency… in Primary and Secondary sector

Value Added- gross value of a product minus the costs of raw materials and energy.

SOCIAL INDICATORS

Health and Welfare-

-MDC’s

-more calories

-more proteins

-lower food cost per person due to efficiency

-better healthcare (hospitals, doctors per capita)

-social welfare/ public assistance (elderly, disabled, orphaned, unemployed)

-government/public service (Europe 70%/30% gov’t vs. public)

SOCIAL CONT.Education and Literacy-

- Quantity and Quality

-Student vs. teacher ratio

-LDCs- 30+/1

-MDCs- 20-/1

-Literacy Rate

-MDCs – 98% +

-LDCs – 60% -

- Many LDCs allot a higher % of GDP to education than MDCs but the value of that $ is smaller due to a much smaller overall GDP.

DEMOGRAPHIC INDICATORS -Infant Mortality Rate (IMR)

-Babies that do not survive infancy (poor nutrition, lack of medicine, lack of knowledge)

-Crude Birth Rate (CBR)

-Smaller families (MDC- by choice)

-Economic influences

-Social influences

-Birth control/ female education

-Natural Increase Rate (NIR)

-population growth vs. GDP

-Life Expectancy (on PPT)

-The average number of years a newborn infant can expect to live.

HANS ROSLING

“Change your mindset of the western world.”

WRITING EXERCISE

How would you define human development?

Specifically, what indicators would you focus on if you were trying to measure human development?

Would you measure human development differently than the Human Development Index (HDI)? Why or why not? Explain.