Human Development Index revisited

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Publishing House of Wrocław University of Economics Wrocław 2016

Quality of Life.

Human and Ecosystem Well-being

PRACE NAUKOWE

Uniwersytetu Ekonomicznego we Wrocławiu

RESEARCH PAPERS

of Wrocław University of Economics

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Copy-editing:RafałGalos Layout:BarbaraŁopusiewicz Proof-reading:BarbaraŁopusiewicz Typesetting:AdamDębski Coverdesign:BeataDębska Informationonsubmittingandreviewingpapersisavailableonwebsites: www.pracenaukowe.ue.wroc.pl www.wydawnictwo.ue.wroc.pl ThepublicationisdistributedundertheCreativeCommonsAttribution3.0 Attribution-NonCommercial-NoderivsCCBY-NC-ND © CopyrightbyWrocławUniversityofEconomics Wrocław2016 ISSN 1899-3192 e-ISSN 2392-0041 ISBN 978-83-7695-590-2 Theoriginalversion:printed PublicationmaybeorderedinPublishingHouse WydawnictwoUniwersytetuEkonomicznegoweWrocławiu ul.Komandorska118/120,53-345Wrocław tel./fax713680602;e-mail:econbook@ue.wroc.pl www.ksiegarnia.ue.wroc.pl Drukioprawa:TOTEM

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Introduction

OnSeptember21-22,2015,6thInternationalScientificConference“QualityofLife 2015.HumanandEcosystemsWell-being”washeldinWrocław. Theconferencewasapartofthecycleoftheconferencesonthetopicofquality oflifethathavebeenorganizedbytheDepartmentofStatistics(WrocławUniversity ofEconomics)since1999.Theaimofthecycleistoparticipateinthestillrising alloverthewordwaveofscientificstudiesonqualityoflife:ethicalbackground anddefinitionsofqualityoflife,investigating(howtomeasureit),presentingthe resultsofdifferencesofqualityoflifeovertimeandspace,itsinterdependences with natural environment, mathematical methods useful for the methodology ofmeasuringqualityoflifeandfinally–possiblemethodsofimprovingit.The conferencesaremeanttointegratethePolishscientificcommunitydoingresearch onthesetopicsaswellastomakecontactswithforeignscientists.

ThisyearourhonoraryguestwasProfessorFilomenaMaggino,pastPresident of International Society for Quality-of-Life Studies (ISQOLS), who presented aplenarylecture. Wehostedabout30participants,amongthemscientistsfromSpain,Romania, ItalyandJapan.Wehad24lecturesonsuchavarietyoftopicsascarbonfootprint andmathematicalpropertiesofsomeestimators.Thecommonbackgroundofall ofthemwastobettercomprehend,measureandpossiblytoimprovethequalityof humans’life. Thepresentvolumecontainstheextendedversionsofsomeselectedlectures presented during the conference. We wish to thank all of the participants of the conference for co-creating very inspiring character of this meeting, stimulating productivediscussionsandresultinginsomepotentiallyfruitfulcooperationover new research problems. We wish also to thank the authors for their prolonged cooperationinpreparingthisvolume,thereviewersfortheirhardworkandformany valuable,althoughanonymous,suggestionsthathelpedsomeofustoimprovetheir works.

Finally, we wish to thank the members of the Editorial Office of Wrocław University of Economics for their hard work while preparing the edition of this volume,continuouskindnessandhelpfulnessexceedingtheirdutiesofthejob.

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PRACE NAUKOWE UNIWERSYTETU EKONOMICZNEGO WE WROCŁAWIU

RESEARCH PAPERS OF WROCŁAW UNIVERSITY OF ECONOMICS nr 435 ● 2016

Quality of Life. Human and Ecosystem Well-being ISSN 1899-3192

e-ISSN 2392-0041

Jerzy Śleszyński

UniversityofWarsaw,FacultyofEconomicSciences e-mail:sleszynski@wne.uw.edu.pl

HUMAN DEVELOPMENT INDEX REVISITED*

NOWE SPOJRZENIE NA WSKAŹNIK ROZWOJU

SPOŁECZNEGO

DOI:10.15611/pn.2016.435.02

Summary: The paper provides important information about Human Development Index

(HDI)methodologywhichwasmodifiedaroundtheyear2011.Theoldmethodandtheitsnew versionisdiscussedandevaluatedfromthepointofviewofpolicymakingandsustainability. ThepaperrecallssomerecentassessmentsofHDIfortheEuropeanUnionandespeciallyfor Poland.ThispresentationisbasedontheUnitedNationsDevelopmentProgrammereports andsupplementedbyexplanatorycommentswithregardtoselectedcriteriaandissuesof HDI. Keywords:qualityoflifeindicators,HumanDevelopmentIndex. Streszczenie: ArtykułdostarczaważnychinformacjinatematmetodykiobliczaniaWskaźnika

Rozwoju Społecznego (Human Development Index − HDI). Metoda liczenia HDI była stopniowoprzekształcanaiostatniozostałazmienionaw2011roku.Artykułprzedstawiastarą inowąmetodęliczeniaHDIzuwzględnieniemichpodstawformalnychiideowych.Następnie uwzględniaproblemprzydatnościwskaźnikadlapodejmowaniadecyzjidotyczącychrozwoju społeczno-gospodarczego oraz dla monitorowania rozwoju trwałego i zrównoważonego. WymieniarównieżikomentujeostatniedostępneoszacowaniaHDIdlaUniiEuropejskiej i Polski. Wyniki zaczerpnięto z raportów agendy Organizacji Narodów Zjednoczonych zajmującej się Planowaniem Rozwoju. Wyliczone wartości wskaźników uzupełniono wyjaśniającym komentarzem odnoszącym się do wybranych kryteriów i aspektów HDI. WzakończeniuwymienionokierunkirozwojuwskaźnikaHDI,awszczególnościpokrewne miernikimającesłużyćpomiarowinowychwymiarówrozwojutrwałegoizrównoważonego. Słowa kluczowe:wskaźnikijakościżycia,WskaźnikRozwojuSpołecznego. * _{Thispaperwaselaboratedaftermyseminar“SustainableDevelopmentanditsIndicators”atthe} FacultyofEconomicSciences,UniversityofWarsawwithalittlehelpofmyforeignstudents:Gadir Baydili,HungDuyDinh,LiliGuo,PunhanHuseynov,PingLi.

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HumanDevelopmentIndexrevisited 41

1. Introduction

HumanDevelopmentIndex(HDI)isasyntheticindicatorofhumandevelopment thatispublishedbytheUnitedNationsDevelopmentProgramme(UNDP).TheHDI providesanalternativetothecommonpracticeofevaluatingacountry’sprogressin developmentbasedonpercapitaGrossDomesticProduct(GDP).TheHDIisthe leadingindicatoroftheHumanDevelopmentReportwhichisanindependentreport commissionedbytheUNDP.TheHumanDevelopmentIndex(HDI)isasummary measureofaverageachievementinkeydimensionsofhumandevelopment.

The HDI has a significant impact on drawing the attention of governments, corporationsandinternationalorganizationstoaspectsofdevelopmentthatfocus ontheexpansionofchoicesandfreedoms.TheHDIhasenabledinnovativethinking aboutprogressbycapturingthesimpleyetpowerfulideathatdevelopmentisabout muchmorethanincome. However,theoriginalHDIhasitsobviousandimmanentconstraints.TheHDI doesnotaddressinequalities,poverty,humansecurity,empowerment,anddoesnot reflectdirectlyonenvironmentalandsustainabilityaspects.Recently,overtheyears theHumanDevelopmentReportpublishedbyUNDPhasintroducednewmeasures toevaluateprogressinreducingpovertyandempoweringwomen. HumanDevelopmentIndex(HDI)waslaunchedintheninetiesofthetwenty centurybyPakistanieconomistMahbubulHaq.HDIisasinglenumberstatisticasa frameofreferenceforbothsocialandeconomicdevelopment.HDIisastatisticused torankcountriesinasport-likemanner.HDIisaveryusefultoolappliedtoassess theaccomplishmentsofthenationinaprocessofincreasingbroadlyunderstoodthe qualityoflife.Basically,itisprobablythebestknowncompositerecordofsocial andeconomicprosperity.

The general evaluation of a nation is based on individuals’ wellbeing but is expressedbyasinglenumberinnon-monetarytermsperonecountryandperone year.Sincebeingproposedinthe1990s,theHDIindicatorbecameverypopular andraisedtheproblemofmeasurementandexaminingofsocialadvancement,both inacademicandpoliticalcircles,andalsoinpublicdiscussionconcerningissuesof humanwellbeinganditsimprovement.

A relative simplicity of the calculation method of HDI combined with the essentialmessagethatimprovementisaboutmorethaneconomicgrowthhasadded toitsfame.TheNewYorkTimesstates:“Sofaronlyonemeasurehassucceededin challengingthehegemonyofgrowth-centricthinking.ThisisknownastheHuman DevelopmentIndex(...)”[Gertner2010].HDIhasbeenhighlysuccessfulbecause itsannualreportsareattractiveandcitedinmanycountriesandtheworldmedia. TheHDIpretendstobeakeymeasureofhumansocietyimprovementbecauseit quantifiestheaccomplishmentsofanationinthreefundamentalspheresofhuman lifeimprovement.

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42 JerzyŚleszyński

HumanDevelopmentReportwaspublishedfirstin1990.SincethanUNDPis publishingHDIestimatesannuallyandpretendstoreportthatimprovementisstrictly connected with the extension of individuals’ freedom, their wellbeing and great lives.ThepresentformulaofHDIisthegeometricmeanofstandardizedestimates fromeachofthreemeasurements:alongandhealthylife,beingknowledgeable, andhavingadecentstandardofliving.ThespecializedtechnicalnotesofUNDP describetheprogresstocomputetheHDI,informationsourcesandtheconceptused tojustifythesystemofwages[UNDP2015]1_{.However,inadditiontotheUNDP} verypositivework,ithastobestressedthatHDIisjustonemoremeasurementtool tomonitorthehumanprogress.

2. Old method of HDI calculation

TheHumanDevelopmentIndex(HDI)isasyntheticmeasureofachievementsin keydimensionsofhumandevelopment:alongandhealthylife,accesstoknowledge andadecentstandardofliving.ThestandardformulacharacterizingtheHDIwas acceptedbytheUnitedNationsDevelopmentProgram.Thestrategyforcomputing HDIstartedintheninetiesandhasbeenevolvingfromthebeginningof2010.HDI startedtoupgradethenewelucidationofthreemeasurements.However,beforethe year2011therewasabasicsystemtoportraythecomponentsasitisfollowedbelow. TheoriginalHDIwasusedlasttimeinthe2009HumanDevelopmentReport.

The original HDI incorporated three dimensions with respect to the three indexes: 1. Lifeexpectancyatbirth,asanindexofpopulationhealthandlongevitycon-tributingtotheHDI. 2. Knowledgeandeducation,asanindexmeasuredbytheadultliteracyrateand thecombinedprimary,secondary,andtertiarygrossenrollmentratio. 3. Standardofliving,asitwasindicatedbytheindexofGrossDomesticProduct (GDP)percapitaandatPurchasingPowerParity. Ingeneral,threedimensionswerereportedinthreedifferentunits.Thus,there wasaneedchanging“x”asacrudevariableintoanunit-lessrecordvalue“x_index” standardizedbetween0and1.Themostsimplestandardizationformulawasapplied tocalculateanindexofavariable“x”: x x min(x) max(x) min(x) index = − − , where“x”wastheactualvalueofavariable,while“min(x)”and“max(x)”werethe lowestandhighestvaluesthevariable“x”couldattain,respectively. 1 _{Forafullelaborationofthestrategybehindtheindicatoranditsscientificjustification,see:} [Anand,Sen2000;Maddison2010;Oeppen,Vaupel2002;Kahneman,Deaton2014;Klugmanetal. 2011;Riley2005].

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HumanDevelopmentIndexrevisited 43 ThefirstkeycomponentoforiginalHDImethodwasLifeExpectancyIndex (LEI).Itwascomputedapplyingthebasicminimumestimationof25yearsoflife andthehighestestimationof85yearsoflife.IntheformulaLifeExpectancy(LE) wastheactualvaluerecordedforthenationinquestion: LEI LE= − − 25 85 25. KnowledgeandeducationwasthesecondcomponentofHDI.EducationIndex (EI) was measured by the Adult Literacy Ratio (ALR) divided by 100 with 2/3 weighting and the combined primary, secondary, and tertiary Gross Enrollment Ratio(CGER)dividedby100with1/3weightingwerefinallyrepresentedinthe educationindex: ALI ALR GEI CGER EI ALI GEI. = − − = − − = + 0 100 0 0 100 0 2 3 13 , ,

The third component of HDI was Gross Domestic Product Index (GDPI) andreferreddirectlytoGrossDomesticProduct(GDP)−themostcommonand acceptedeconomicindicatorofeconomicactivity.Thestandardoflivingdimension wasmeasuredbyGDPpercapitawiththereferenceminimumincomeseton$100 (PPP)andthemaximumincomeseton$40000(PPP): GDPI= log(GDP)− − log( ) log( ) log( ). 100 40000 100 Thefinalassessmentandofficialresultforacountryinquestionandperyear wasthemathematicformulaofHDIwhichwastheunitlessarithmeticmeanofall threeindexesgivenabove:

HDI=1₃(LEI EI GDPI).+ +

3. New framework for HDI

Publishedonthe4thofNovember2010HumanDevelopmentReport(andupdated onthe10thofJune2011)wasthenewHDIcalculatedasthegeometricmeanof normalizedindexesforeachofthethreedimensions.Sincethenandtoday,HDI combinesthesamethreedimensionsbutinaslightlydifferentway:

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44 JerzyŚleszyński 1. Lifeexpectancyatbirthismeasuredbyanindexoflifeexpectancywhich intentionallyexpressesthegenetic,medicalandenvironmentalqualityoflife. 2. Knowledgeandeducationismeasuredusinganindexcombiningtwosub--indexes:meanyearsofschoolingandexpectedyearsofschooling.Theyshould expresstheaveragelevelofeducationofthesocietyandtheprospecttoimprove individualeducation. 3. Adecentstandardoflivingisassociatedwiththewealthofthenationmeasu-redbyanindexofGrossNationalIncome(GNI)percapitaandatPurchasingPower Parity(PPP). TheoldformulaofHDI,until2011,wasspecificinseveralpoints: • HDIwasasumcontributedby3uniformlyweightedfactors:LEI(LifeExpec-tancyIndex),EI(EducationIndex),GDPI(GrossDomesticProductIndex); • MinimumLEsetatthelevelof25years; • EducationIndexasaweightedsumofAdultLiteracyRateandGrossEnrollment Index; • LivingstandardevaluationbaseduponGrossDomesticProduct; • MaximumGDPsetatthelevelof$40000. ThemostobviousdifferencesconcernthereferencevalueforLifeExpectancy, interpretationofeducationcomponent,usingGNIinsteadofGDP,andofcoursethe mathematicsofthefinalindexvalue.Thus,modificationtoHDI,2011onwards,can besummarizedasfollows: • HDIisageometricmeanofthreecomponents:LEI(LifeExpectancyIndex),EI (EducationIndex),II(IncomeIndex); • MinimumLEsetatthelevelof20years; • EducationIndexcalculationbaseduponMeanYearsofSchooling(MYS)and ExpectedYearsofSchooling(EYS)definedasfollows: – MYS:Yearsthata25-year-oldpersonorolderhasspentinschools; – EYS:Yearsthata5-year-oldchildwillspendwithhiseducationinhiswhole life; • TheGrossNationalIncome(GNI)usedinsteadofGDPbecause: – GNIisthetotaldomesticandforeignoutputclaimedbyresidentsofacoun-try,consistingofGrossDomesticProduct(GDP)plusfactorincomesearned byforeignresidents,minusincomeearnedinthedomesticeconomybynon-residents; – GNIbetterthanGDPdescribesthestandardoflivinginthecountry;

• Maximum GNI, in the 2014 Human Development Report set at the level of $75000. ThelatestmodificationinHDImethodologyincludesthechangeinmaximafor normalizationofdimensionalindices–previouslytheywereequaltotheobserved maximaovertheperiodsince1980.Nowtheyarefixedat85yearsforLE,15years forMYS,18yearsforEYS,and$75,000forGNIpercapita.Thepreviouslyused approachof“observedmaxima”wascriticizedmainlyonthegroundsthattheHDI

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HumanDevelopmentIndexrevisited 45 ofthecountryshoulddependonlyonthecountry'sownachievements,however, whenusingtheobservedmaximatheHDIalsodependedonothercountries,onthose whosevalueswereusedasmaxima.ForexampletheHDIofBrazilalsodepended onhowlongJapaneselived,howwellAmericanadultswereeducated,andhowhigh GNIpercapitainQatarwas. Theotherrecentchangeisinthewaytheeducationindicatorsareaggregated. Geometricaggregationpreviouslyproposedforanewmethodofcalculationwas criticizedonthegroundsthatatypicaldevelopingcountryhasa(much)highervalue ofexpectedyears ofschooling thanofmean years ofschooling. Byaggregating thesetwoindicatorswiththegeometricmeansuchacountryis“penalized”because ofthedifference,althoughthecountryisimprovingeducationlevelbyhavingmore childrenattendingschoolatalllevels.Theuseofthearithmeticmeanprovidesan equaltreatmenttobothindicators.However,thesechangeshaveaminimalimpact onvaluesandranks.

4. New method of HDI calculation

Basically,asitwasnecessaryintheoldformulaofHDI,thesamestandardization equationwasapplied:ingeneral,theindexisequaltotheactualvalueminusthe minimumvaluedividedbythedifferencebetweenthemaximumandtheminimum values.Obviously,theminimumandthemaximumvalues(goalposts)weresetin ordertotransformtheindicatorsexpressedindifferentunitsintoindicesbetween0 and1.Thesegoalpostsactasthe“naturalzeroes”fortheminimumvalueandasthe “aspirationalgoals”forthemaximumvalue,respectively,fromwhichcomponent indicatorsarestandardized.However,asitwasalreadyshownanddiscussedinthe previoussectionofthispaper,severalmodificationswereappliedtothegoalposts. ThejustificationforplacingthenaturalzeroforLifeExpectancyat20yearsis basedonhistoricalevidencethatnocountryinthe20thcenturyhadlifeexpectancy of less than 20 years [Maddison 2001; Oeppen, Vaupel 2002; Riley 2005]. The maximumLEisfixedat85years.Intentionally,healthofthenationisrepresented byLifeExpectancy(LE)andLifeExpectancyIndex(LEI)iscalculatedasfollows: LEI LE= − − 20 85 20. Societycansubsistwithoutformaleducation,justifyingtheeducationminimum of0years.Themaximumformeanyearsofschoolingisfixedat15yearsbecause thisistheprojectedmaximumofthisindicatorfor2025.Themaximumforexpected yearsofschoolingisdeterminedat18yearsbecausethisisequivalenttoachieving amaster’sdegreeinmostcountries.Fortheeducationdimension,thestandardizing equationisfirstappliedtoeachofthetwoindicators,MYSandEYS,tocalculate twoindexes:MYSIandEYSI.Next,thearithmeticmeanofthetworesultingindices istakentocalculatetheEducationIndex(EI):

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46 JerzyŚleszyński MYSI MYS EYSI EYS EI MYSI EYSI = = = + 15 18 2 , , . TheminimumvalueforGrossNationalIncome(GNI)percapitaseton$100 isjustifiedbytheconsiderableamountofunmeasuredsubsistenceandnonmarket productionineconomiesclosetotheminimum,whichisnotcapturedintheofficial data.Themaximumissetat$75,000percapita.KahnemanandDeaton[2010]have shownthatthereisvirtuallynogaininhumandevelopmentandwell-beingfrom annualincomebeyond$75,000.Assumingannualgrowthrateof5percent,only threecountriesareprojectedtoexceedthe$75,000ceilinginthenextfiveyears. Because each dimension index is a proxy for capabilities in the corresponding dimension,thetransformationfunctionfromincometocapabilitiesislikelytobe concave[Anand,Sen2000]−thatis,eachadditionaldollarofincomehasasmaller effectonexpandingcapabilities.Thusforincome,thenaturallogarithmoftheactual, minimumandmaximumvaluesisused.IncomeIndex(II)resultsfromtheformula: II= ln(GNI)− − ln( ) ln( ) ln( ). 100 75000 100 Finally,theHDIisthegeometricmeanofthepreviousthreenormalizedindexes: HDI=3LEI EI II⋅ ⋅ _. Severalmethodologicalproblemswillbebrieflycommentedinthenextthree subsections of this paper. They refer to the category of Gross National Income, missingvaluesproblem,andcountriesgrouping.Allofthemwillbeexplainedand commentedusingsomebasicmaterialsdeliveredbytheUnitedNationsDevelopment Programme[UNDP2015].

4.1. Method used to express income

Basically,theincomedataarebasedupontheWorldBankassessments.TheWorld Bank’s2014WorldDevelopmentIndicatorsdatabasecontainsestimatesofGNIper capitain2011PurchasingPowerParity(PPP)termsformanycountries.Forcountries missingthisindicator(entirelyorpartly),theHumanDevelopmentReportcalculates itbyconvertingGNIfromcurrenttoconstanttermsusingtwosteps[UNDP2015]. First,thevalueofnominalGNIpercapitaisconvertedintoPPPtermsforthebase year(2011).Second,atimeseriesofGNIpercapitain2011PPPtermsisconstructed

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HumanDevelopmentIndexrevisited 47 byapplyingtherealgrowthratestotheGNIpercapitainPPPtermsforthebase year. Inthecalculationtherealgrowthrateistakenintoconsideration[UNDP2015]. TherealgrowthrateisimpliedbytheratioofthenominalgrowthofcurrentGNI percapitainlocalcurrencytermstotheGDPdeflator.Toobtaintheincomevalue for 2013, GDP growth rates (based on growth in constant terms) based on the InternationalMonetaryFund(IMF)projectionsareappliedtothemostrecentGNI valuesinconstantPPPterms. TheIMFmethodologydeterminesallfurtherprojections.TheIMF-projected growthratesarecalculatedbasedonlocalcurrencytermsandconstantpricesrather thaninPPPterms.ThisavoidsmixingtheeffectsofthePPPconversionwiththose ofrealgrowthoftheeconomy.OfficialPPPconversionratesareproducedbythe InternationalComparisonProgram,whosesurveysperiodicallycollectthousands ofpricesofmatchedgoodsandservicesinmanycountries.Thelastroundofthis exerciserefersto2011andcovers180countries.

4.2. Estimating missing value

Obviously, collecting every year a homogenous data set for all countries is not possible. For a small number of countries missing some indicators, the Human DevelopmentReportestimatesthemissingvaluesusingcross-countryregression models.ThedetailsofthemodelsusedareavailableattheinternetpageofUNDP presentingTechnicalNotesofitsHumanDevelopmentReport[UNDP2015].

In particular, in the last report expected years of schooling were estimated forseveralcountriesincluding:Coted’Ivoire,Haiti,Liberia,theFederatedStates of Micronesia, Papua New Guinea, Sierra Leone, South Africa, Sudan and Turkmenistan.Actually,meanyearsofschoolingwereestimatedforAntiguaand Barbuda, Cape Verde, Dominica, Equatorial Guinea, Eritrea, Grenada, Kiribati, Madagascar, Palau, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the GrenadinesandSolomonIslands. 4.3. Grouping countries The2014HumanDevelopmentReportintroducesasystemoffixedcut-offpoints forthefourcategoriesofhumandevelopmentachievements[UNDP2015].These pointsmakegroupingofcountriesandtheirmostgeneralevaluationpossible.The cut-offpoints(COP)areobtainedastheHDIvaluescalculatedusingthequartilesof thedistributionsofcomponentindicators. TheresultingHDIvaluesareaveragedoverthe10-yearinterval(2004-2013):

COP_q = HDI(LE_q,MYS_q,EYS_q,GNIpc_q)×q=1,2,3.Forinstance,definedthreshold valuesLE₃,LE₂,andLE₁denotethreequartilesofthedistributionoflifeexpectancy acrosscountries.Finally,theresultingHDIcut-offpointsforthecountrygrouping inthelastHumanDevelopmentReportareasfollows:

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• HighHumanDevelopment(COP₂)=0.700, • MediumHumanDevelopment(COP₁)=0.550.

However,themainobjectiveofsettingthresholdvaluesiscountriesgrouping that allows for classifying them and attribute to one of four general group of countries:VeryHighHumanDevelopment,HighHumanDevelopment,Medium HumanDeveloped,andLowHumanDevelopment(thesearecountrieswhichare belowthelevelofCOP₁,whichis0.550). Therefore,thisgeneralinterpretationofHDIallowsforasimplifiedgrouping anddevelopmentassessmentofallnations: • around30%ofallcountriesqualifiesforHighorVeryHighHumanDevelop-ment, • around51%ofallcountriesqualifiesforMediumHumanDevelopment, • around19%ofallcountriesqualifiesforLowHumanDevelopment. Thisclassificationcreatesafirmbackgroundforthemostcommontypology, which is not officially certified by the United Nations, but extremely popular in themedia,indicatinginaglobalcommunitytwopolarizedandopposedgroupsof countries:“developedcountries”and“developingcountries”.

5. Ranking of HDI

Human Development Report is annually published by the United Nations DevelopmentProgrammeandpresentswidelycommentedandcitedHDIrankingof almostallcountriesoftheworld.Thelistofcountriesisimpressiveandtakesinto accountthevastmajorityofUNmembersincludingHongKong,andPalestinians territories.Onlyfewcountriesareexcludedduetolackofdata(e.g.NorthKoreaand Fiji). ThelatestrankingofHDIindicatorswasbasedondataavailableforyearsof 2012-2013andwaspublishedin2014[UNDP2015].ThehighestHDIwasattained byNorwayandthetopfivecountrieswereasfollows: • Norway–0.944, • Australia–0.933, • Switzerland–0.917, • Netherlands–0.915, • USA–0.914. ItisnotsurprisingthatIMFclassifiesallthesecountriesas“advancedeconomies” [InternationalMonetaryFund2015].However,neitherofthethreeleadingcountries accountsforthetopthreeresultsinGDPpercapita[TheWorldBank2015],which clearlyindicatesthateconomicgrowthisnotalwaystheultimatesourceofhuman developmentlevel.However,andingeneral,OECDcountriesarethepermanent leadersofallHDIrankings. OnthebottomoftheUNDPrankinglisttherearecountrieswiththelowestHDI andsuchanegativeresultwascalculatedforagroupofAfricancountries:

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HumanDevelopmentIndexrevisited 49 • Niger–0.337, • DemocraticRepublicoftheCongo–0.338, • CentralAfricanRepublic–0.341, • Chad–0.372, • SierraLeone–0.374. Niger,theDemocraticRepublicoftheCongoandtheCentralAfricanRepublic are classified as Sub-Saharan Africa region countries and included in the list of Least Developed Countries by UN [UN 2015]. However, in this case, both the CentralAfricanRepublicandtheDemocraticRepublicoftheCongohavethelowest GNIpercapitainPPPtermsconvertedtointernationaldollars[TheWorldBank 2015],intheworldwiththevaluesof600$and740$,respectively.Thisillustrates thateconomicdevelopmentlevelcanbethedecisivefactorofhumandevelopment forsomecountries.

It is perfectly clear that the three dimensions incorporated in HDI can be a geometricmeandominatedbyonefactorsomehowcompensatingpoorperformance ofthetworemainingfactors.PolandandQatarsharealmostthesameplaceinthe recentrankingsofHDIbutthisishappeningbecauseEducationIndexforPoland compensatesPoland’slowerLifeExpectancyandlowerGNIwhichisalmostsix timessmallerthanGNIofQatar.Therefore,itisnecessarytoassessHDIatdifferent dimensionsinordertoidentifyradicaldeviationsfromthegeneralranking.Inthe next paragraphs several examples illustrate this aspect of HDI measurement for particularcountrieswhichexperiencepoorcorrelationfortheirhealth,educationor incomeindices. Firstly,HDIfinalvalueincomparisonwithLifeExpectancyIndex(LEI).Itcan beidentifiedthatthereareseveralcountrieswhichareclassifiedintheLowHuman DevelopmentcategorybuthaveLEIvaluessimilartothecountrieswhichareinthe HighHumanDevelopmentcategory.Forinstance,thecountryofSolomonIslands hasthesimilarLEIvaluetoRussianFederation,withthevaluesof0.733and0.738, respectively.However,theSolomonIslandsisincludedinthelistofLowHuman Developmentcountrieswiththevalueof0.491whileRussianFederationisclassified asHighHumanDevelopmentcountrywiththevalueof0.778.Thisexampleclearly indicates that better health level does not necessarily lead to the higher Human DevelopmentLevelinthecountry. Secondly,HDIvalueconfrontedwithEducationIndex(EI).Inthiscaseitcan befoundthatthereareseveralcountrieswhichareclassifiedintheHighHuman DevelopmentcategorybuthaveEIvaluessimilartothecountrieswhichareinthe MediumandLowLevelHumanDevelopmentcategory.Forinstance,Kuwaithasthe samemeanyearsofschoolingofadultsasZimbabwewiththeyearsof7.2.However, KuwaitisincludedinthelistofHighHumanDevelopmentcountrieswiththevalue of0.814andZimbabweisclassifiedasLowHumanDevelopmentcountrywiththe valueof0.492.Thisexampleclearlyindicatesthatacountrycanattainquiteahigh HDIvaluedespiteexperiencingpooreducationlevelinthesociety.

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Table 1. HDIclassificationbyindicators,groupsandregions

Classification ₂₀₁₃HDI ₂₀₁₃LE MYS₂₀₁₂ ₂₀₁₂EYS

GNI percapita 2013 (2011PPP$) HDIGroups VeryHigh Human Development 0.890 80.2 11.7 16.3 40046 HighHuman Development 0.735 74.5 8.1 13.4 13231 Medium Human Development 0.614 67.9 5.5 11.7 5960 LowHuman Development 0.493 59.4 4.2 9.0 2904 Regions LatinAmerica and the Carribean 0.740 74.9 7.9 13.7 13767 Europeand CentralAsia 0.738 71.3 9.6 13.6 12415 EastAsiaand thePacific 0.703 74.0 7.4 12.5 10499 ArabStates 0.682 70.2 6.3 11.8 15817 SouthAsia 0.588 67.2 4.7 11.2 5195 Sub-Saharan Africa 0.502 56.8 4.8 9.7 3152 Source:author’sownelaborationbasedon[UNDP2015]. Thirdly,HDIvalueincomparisonwithIncomeIndex(II).Alsowithregardto GNIthereareseveralcountrieswhichareclassifiedintheLowHumanDevelopment categorybuthaveIIvaluessimilartothecountrieswhichareintheHighHuman Developmentcategory.Forinstance,AngolahasthesimilarIIvaluetoGeorgiawith thevaluesof0.626and0.639,respectively.However,Angolaisincludedinthelistof LowHumanDevelopmentcountrieswiththevalueof0.526andGeorgiaisclassified asHighHumanDevelopmentcountrywiththevalueof0.744.Thisexampleshows thathigherincomeleveldoesnotnecessarilyleadtotheHighHumanDevelopment levelofthecountry. Thistypeofinconsistencycharacteristicforacompositesyntheticindicatoris duetoitscalculationmethod.HDItakesgeometricmeanofthreeindexesandin thiswaygivesequalweightstoallvariables,regardlessoftheabsolutevalueofa separatecomponentvariable.Therefore,acountrywhichhasatleastoneindexof

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thehighestvalueintheworldcanstillachievehighHDIvalueinspiteofhaving poorvalueoftworemainingindexes.

Inadditiontoacountryanalysisbasedonseparatedindexesformingthesynthetic indicator,HDIresultscanbeinspectedinawaybasedondivisionintogroupsof countries and regions. This method of analysis would rely on data presented in Table 1. In the case of group classification of countries each superior group has highervalueforallindividualindexeswhencomparedtothesucceedingcategory. However,interestinginconsistencyappearsbetweenHDIassessmentsinthecase ofclassificationbasedonregions.Particularly,despitethefactthatregion“Latin AmericaandtheCaribbean”hasthehighestHDIvalue,region“EuropeandCentral Asia”hasthehighestmeanyearsofschoolingaswellasregion“ArabStates”has thehighestGNIpercapita. Unfortunately,accordingtotheclassificationsystemofUNDP,EUorOECD countriesdonotformaseparateregionappropriateforthisanalysis.Thus,inthe nextpartofthispaperananalysisoftheHDIforEUcountrieswillbeperformed.

6. Assessment of HDI trends for the EU countries and Poland

HDIfortheEUentityandforselectedEUcountries,basedondataprovidedby UNDP[UNDP2015],wascalculatedtodiscloseseveralpatternsforEUcountries intheperiodoflast33years. First,indicatorsdiscloseaclearNorth-Westvs.South-EastdiversityinEurope. Generally,oldEUmembercountrieslikeGermany,theUnitedKingdomandFrance showbetterperformancedescribedbyHDIthancountrieslikePoland,Estoniaand Croatia. In addition to that, many Eastern European countries are outperformed by their North-Western European counterparts on two dimensions of human development.Thisconclusioncanbewithdrawnfromthedetaileddatatablesof UNDPforeducationandGNI.

Ontheotherhand,though,thispatterndoesnotholdwhencomparingNorth-Western European regions with Southern European regions. Southern European regionsoutperformmanyNorth-WesternEuropeanregionswhenitcomestothe healthdimensionrepresentedbyLifeExpectancy.Themainbottlenecktohuman development for Southern European regions seems to be the knowledge and educationdimension(especiallysouthernItalyandlargepartsofGreece)andthe incomedimension(especiallySouth-EastSpainandSouthernItaly).

AfterageneralevaluationofoveralltrendsandpatternsforEUandselected countries, a brief analysis will concern HDI for Poland. Poland’s HDI value for 2013was0.834‒intheVeryHighHumanDevelopmentcategory‒positioningour countryat35outof187countriesandterritories.Between1980and2013,Poland’s HDIvalueincreasedfrom0.687to0.834,whichmeansanincreaseof21%oran averageannualincreaseofabout0.6%[UNDP2015].

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DespiteoverallincreaseinHDIvalue,therearesignificantdifferencesamong trendsofeachofHDIdimensionforPoland.Therefore,eachdimensionshouldbe analyzed separately to identify a key reason behind the evolution of each trend. Firstly, Life Expectancy Index was the best performing index among others and increasedby11%between1980and2013,withanaverageannualincreaseofabout 0.3%. The main reason for increase in Life Expectancy Index was due to more healthynaturalandworkingenvironment,food,andbecauseofimprovedmedical careservices.Inconclusion,aquitesignificantincreaseinlifeexpectancyatbirth by5.5yearswasreportedforanabovementionedperiod. Secondly,EducationIndexwastheworstperformingdimensionbetween1980 and2000.However,duetorobustprogressineducation,Poland’sEducationIndex reachedandpassedIncomeIndexattheendofthe1990s.Themainreasonforan outstandingimprovementinEducationIndexwasdueto44%increaseinmeanyears ofschooling(ofadults)from7.7to11.1yearsand23%increaseinexpectedyearsof schooling(ofchildren)from12to14.8years,between1980and2000.Consequently, EducationIndexforPolandroseby40%between1980and2013,withanaverage annualincreaseofabout1%. Finally,IncomeIndexforPolandiscurrentlytheworstperformingindexamong threeconsidereddimensions.However,Poland’sGNIpercapitainPPPwas$21,487 for 2013, which increased by about 105% between 1980 and 2013, with average annualgrowthof2.2%.Asaresult,IncomeIndexgrewby15%between1980and 2013,whichwaswellbelowthanthegrowthofEducationIndex,butstillhigher thantheriseforLifeExpectancyIndex.Thisevaluationcomparespuredynamics ofindexeswithoutabroaderviewofworldeconomyanditsstagnation.Certainly, PolandisdoingverywellandhasapositivegrowthrateforGDPandGNI.However, thisperformanceisnotasmuchsignificantforthevalueofHDIasthemostrecent increasesofLifeExpectancyandEducationIndexes.

7. Conclusions

TheUNDP’siconicHDIisjust25yearsoldtoday.Ofalltheworld’sindices,the HDIissurelythemostingenious.Itrankscountriesbythequalityoflifetheygive totheirpeople.Itsbrillianceliesinitssimplicity.Accordingtotheindexphilosophy, threeparametersgovernhumandevelopmentandqualityoflife:health,education, andwealth.TheHDI’ssimplicityhasensureditsendurance.

Because HDI allows for a very transparent ranking, it is also an aspiration index and it sets straightforward targets for nations. Its influence should not be underestimated because it has forced nations to look beyond national income as a crude measure of success – a vital step as our global society attempts to live within planetary boundaries. Its effect has seen governments and international organizations set up projects and policies to attempt to increase their HDI rank. Indeed,theforewordofthe2010reportstated:“Thehumandevelopmentapproach

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has profoundly affected an entire generation of policy-makers and development specialistsaroundtheworld”[UNDP2015].

Therearesomepositiveandusefulcharacteristicsassociatedwiththeuseof HDI. A classification based on HDI assessment used to distinguish whether the countryisdevelopedordeveloping.HDIhelpstomeasuretheimpactofeconomic policiesonthequalityoflifeinitsbroadsense. However,HDIwasnotdesignedtomonitorsustainabledevelopmentandhas severalfailings[Kovacevic2010].Theseareimportantomissionsgiventhatthereis overwhelmingevidencethathumandevelopmentisnotsustainable.Theshort-listof omissionsandobstaclescanbeasfollows:

• HDI does not include any explicit ecological considerations except human health, • HDIdoesnotincludeanyspecificsocialconsiderationsexceptschooling, • HDIstillpromoteseconomicgrowthratherthansustainabledevelopment. Moreover,therearesignificantexamplesofaverymisleadinginterpretationof HDIforverydifferentcountries.SomecountriesreportprogressinHDIbutthey arenotdemocraticandpoor.AparadoxlikeCubaissymbolic.Cubarankedaround positionnumber50hadlifeexpectancyof70.1years(higherthantheUSA,rank4) butGNIof$5,416,3.5timeslowerthanEquatorialGuinearankedatpositionnumber 136. Scientistsproposemodificationsandsupplementaryindicatorstosupportthe traditionalHDI[Beckeret.al.2005].TheUNDPexpertsattempttoaddsomesocial aspectswidelyconsideredascontributingtosustainabledevelopmentinapositive way[Alkire,Foster2010].NewapproachestoHDIincludesocialinequality,poverty [Dotter,Klasen2014],andgenderproblem[Gayeet.al.2010].Thereisavisible emphasis on sustaining human progress by reducing vulnerability and building resilienceofthesocialsystem.TheUNDPdatabaseisanopenaccessresource andprovidesdata,methodologyandresultsofthefollowingnewindicators[UNDP 2015]: • Inequality-adjustedHumanDevelopmentIndex(IHDI), • MultidimensionalPovertyIndex(MPI), • GenderInequalityIndex(GII), • GenderDevelopmentIndex(GDI). Inconclusion,thelast2014HumanDevelopmentReportwasfocusedonHDIbut alsopreparedtobealargedatabaseandmuchmorecompleteevaluationofhuman developmentimprovements.Newmeasuresenumeratedaboveshowthenewwaybut arenotsufficient,especiallybecauseoftheenvironmentalgapinthemethod.The HDIadvantagesshouldnotbeforgottenandHDIdrawbackscanbecuredbyamore advancedindicatorsaddressingthemostimportantbutstillneglectedcharacteristics ofhumandevelopment.

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