Concept of HDI calculation

1. How to Calculate?
Javed Mazher – Deputy Director Planning, Monitoring, Evaluation and
Report (PMER) at Pakistan Red Crescent

2. The origins of the HDI are found in the annual Development
Reports of the United Nations Development
Program (UNDP). These were devised and launched
by Pakistani economist Mehboob-Ul-Haq in 1990 and had the
explicit purpose "to shift the focus of development economics
from national income accounting to people-centered policies".
Working along with Nobel laureate Amartya Sen, they worked on capabilities and
functioning that provided the underlying conceptual framework. Sen initially opposed
this idea, but he soon went on to help Haq develop the Index in the future. Sen was
worried that it was going to be difficult to capture the full complexity of human
capabilities in a single index but Haq persuaded him that only a single number would
shift the attention of policy-makers from concentration on economic to human well-
being.

3. Understand the three major areas of development that the Human
Development Index focuses on:
1. Health,
2. Education, and
3. Income.
Health focuses on longevity and the life expectancy of a country's residents
at birth.
Education measures adult literacy, as well as the percentage of residents
enrolled in various levels of education.
Finally, income measures the gross domestic product (GDP) of a country
in U.S. dollars. Together, these factors show varying levels of development
that can pinpoint specific areas that need work. For example, a country may
seem developed to outside critics if it has a high GDP, but an HDI score may
reveal that its health levels are low.

4. Learn how countries are ranked in terms of their HDI scores. A score of "1" is
a perfect score, meaning a country is as developed as possible. A score of "0"
is given to a country with no level of development.
Countries are ranked between the two extremes by decimal point to the
thousandths place. Most countries in the West rank in the 70th to 80th
percentile, marking a relatively high level of development.

5. Calculate the health score in the Human Development Index. Visit the
United Nations Statistics Division (link is given below) and obtain the life
expectancy at birth for the country in which you are interested.
Subtract 25 (the lowest acceptable age of life expectancy, according to the
UN) from this number. Divide the final amount by "85 -25." Write down the
resulting quotient.
http://unstats.un.org/unsd/demographic/products/socind/default.htm

6. Calculate the education score in the Human Development Index. Visit the
UN Data page for gross enrollment ratio in tertiary and secondary education
(link is given below).
Click the country you are interested in and obtain the gross enrollment
number. Subtract "0" from this, then divide the total by "100." Write down the
quotient.
http://data.un.org/Data.aspx?d=GenderStat&f=inID%3A68

7. Obtain the literacy rate for your country from the UN Statistics Division (link
is given below).
Divide the literacy rate by "100" and write down the quotient.
http://unstats.un.org/unsd/demographic/products/socind/default.htm

8. Add 2/3 of the quotient in Step 4 with 2/3 of the quotient in Step 5. The
resulting sum is the Human Development Index score for education.
Calculate the Gross Domestic Product (GDP) score for your Human
Development Index. Obtain the GDP number for your country from the UN
Statistics Division (link is given below).
http://unstats.un.org/unsd/demographic/products/socind/default.htm

9. Input the GDP into the following equation, replacing "GDP" with the number
listed in the statistics data: log(GDP) - log(100). Write down the total. Divide
by log(40,000) - log(100). Write down the quotient.
Calculate the total Human Development Index number for the country
you've chosen by combining the data from the previous steps. The HDI is
calculated by adding 1/3 of the quotient in Step 3, 1/3 of the quotient in Step
5, and 1/3 of the quotient in Step 6. The sum is the country's Human
Development Index.