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Designing the Inequality-Adjusted Human Development Index (IHDI)

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  • Sabina Alkire

    ()
    (Oxford Poverty and Human Development Initiative at Oxford University)

  • James Foster

    ()
    (George Washington University and Oxford Poverty & Human Development Initiative)

Abstract

As a measure of wellbeing, national income misses variations in the things income can and cannot buy. It also misses variations in people’s claim on that aggregate income. The Human Development Index attempts to address the first weakness by incorporating two additional dimensions, health and education, into its informational bases. However, the second weakness, inequality, is ignored by the traditional HDI. In practical terms this means that any two countries having the same mean achievements will have the same HDI values even if they have very different distributions of achievements. This calls into question the accuracy of the HDI as a reflection of people’s actual achievements. This paper proposes a method for adjusting the HDI to reflect the distribution of human development achievements across the population, and across dimensions. We begin with a discussion of the proposed indices in an idealized setting where variables and their scales have been identified and the data are available. We then address the practical issues that must be addressed when applying these methods to real data. The final section presents and evaluates another related approach.

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Bibliographic Info

Paper provided by Human Development Report Office (HDRO), United Nations Development Programme (UNDP) in its series Human Development Research Papers (2009 to present) with number HDRP-2010-28.

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Length: 50 pages
Date of creation: Oct 2010
Date of revision:
Publication status: Published as background research for the 2010 Human Development Report.
Handle: RePEc:hdr:papers:hdrp-2010-28

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Keywords: Human Development Index; inequality; multidimensional inequality measurement; capability approach; multidimensional welfare.;

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References

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  1. Dowrick, Steve & Dunlop, Yvonne & Quiggin, John, 2003. "Social indicators and comparisons of living standards," Journal of Development Economics, Elsevier, Elsevier, vol. 70(2), pages 501-529, April.
  2. James Foster & Luis Lopez-Calva & Miguel Szekely, 2005. "Measuring the Distribution of Human Development: methodology and an application to Mexico," Journal of Human Development and Capabilities, Taylor & Francis Journals, Taylor & Francis Journals, vol. 6(1), pages 5-25.
  3. Fields, Gary S., 1994. "Data for measuring poverty and inequality changes in the developing countries," Journal of Development Economics, Elsevier, Elsevier, vol. 44(1), pages 87-102, June.
  4. Laurens Cherchye & Wim Moesen & Tom Van Puyenbroeck, 2003. "Legitimately Diverse, yet Comparable: On Synthesising Social Inclusion Performance in the EU," Public Economics Working Paper Series, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Working Group Public Economics ces0301, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Working Group Public Economics.
  5. Desai, Meghnad, 1991. "Human development : Concepts and measurement," European Economic Review, Elsevier, Elsevier, vol. 35(2-3), pages 350-357, April.
  6. Mark McGillivray & Howard White, 1993. "Measuring development? The UNDP's human development index," Journal of International Development, John Wiley & Sons, Ltd., vol. 5(2), pages 183-192, 03.
  7. Suman Seth, 2009. "Inequality, Interactions, and Human Development," Journal of Human Development and Capabilities, Taylor & Francis Journals, Taylor & Francis Journals, vol. 10(3), pages 375-396.
  8. Angus Deaton & Salman Zaidi, 1999. "Guidelines for Constructing Consumption Aggregates For Welfare Analysis," Working Papers, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies. 217, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
  9. Misselhorn, Mark & Klasen, Stephan & Harttgen, Kenneth & Grimm, Michael, 2007. "A Human Development Index by Income Groups," Proceedings of the German Development Economics Conference, Göttingen 2007 12, Verein für Socialpolitik, Research Committee Development Economics.
  10. Frederik Booysen, 2002. "An Overview and Evaluation of Composite Indices of Development," Social Indicators Research, Springer, Springer, vol. 59(2), pages 115-151, August.
  11. Guido Luchters & Lukas Menkhoff, 2000. "Chaotic signals from HDI measurement," Applied Economics Letters, Taylor & Francis Journals, Taylor & Francis Journals, vol. 7(4), pages 267-270.
  12. Sagar, Ambuj D. & Najam, Adil, 1998. "The human development index: a critical review," Ecological Economics, Elsevier, Elsevier, vol. 25(3), pages 249-264, June.
  13. Michela Nardo & Michaela Saisana & Andrea Saltelli & Stefano Tarantola & Anders Hoffman & Enrico Giovannini, 2005. "Handbook on Constructing Composite Indicators: Methodology and User Guide," OECD Statistics Working Papers 2005/3, OECD Publishing.
  14. Krishna Mazumdar, 2003. "A New Approach to Human Development Index," Review of Social Economy, Taylor & Francis Journals, Taylor & Francis Journals, vol. 61(4), pages 535-549.
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Cited by:
  1. Jeni Klugman & Francisco Rodríguez & Hyung-Jin Choi, 2011. "The HDI 2010: New Controversies, Old Critiques," Human Development Research Papers (2009 to present), Human Development Report Office (HDRO), United Nations Development Programme (UNDP) HDRP-2011-01, Human Development Report Office (HDRO), United Nations Development Programme (UNDP).
  2. Permanyer, Iñaki, 2013. "Using Census Data to Explore the Spatial Distribution of Human Development," World Development, Elsevier, Elsevier, vol. 46(C), pages 1-13.
  3. Hill, Ronald Paul & Capella, Michael L., 2014. "Impoverished consumers, Catholic social teaching, and distributive justice," Journal of Business Research, Elsevier, Elsevier, vol. 67(2), pages 32-41.
  4. Reza Farrahi Moghaddam & Fereydoun Farrahi Moghaddam & Mohamed Cheriet, 2014. "IIGHGINT: A generalization to the modified GHG intensity universal indicator toward a production/consumption insensitive border carbon tax," Papers 1401.0301, arXiv.org, revised Apr 2014.
  5. James Foster & Sabina Alkire, 2011. "Understandings and Misunderstandings of Multidimensional Poverty Measurement," Working Papers, The George Washington University, Institute for International Economic Policy 2011-18, The George Washington University, Institute for International Economic Policy.
  6. Reza Farrahi Moghaddam & Fereydoun Farrahi Moghaddam & Mohamed Cheriet, 2011. "A Modified GHG Intensity Indicator: Toward a Sustainable Global Economy based on a Carbon Border Tax and Emissions Trading," Papers 1110.1567, arXiv.org, revised Feb 2013.

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