Human Development Index : An Overview and Methods of Calculation

Human Development Index (HDI) is a way of measuring the human resource growth and well being of a Country. It ranges from 0 - 1 (where 0 means worse and 1 means best). It was introduced by the United Nations Development Programme (UNDP) in its first Human Development Report (HDR) prepared under the stewardship of Mahbub-Ul-Haq in 1990. Most interesting fact about HDI is that, it not only looks into the GDP or per-ca pita income of the country but it also includes a long and healthy life, access to education and a decent standard of living.[post_ads]

Components of Human Development Index(HDI) :- 
Unlike conventional methods like Gross Domestic Product (GDP), Gross National Product (GNP), Net National Product (NNP at factor cost is used in India to derive National Income), this is more elaborated and comprehensive method to determine the real development of a Nation. To calculate the HDI of a country, there are three components which are taken into consideration as follows :-

1. Life Expectancy Index(LEI) :- The first and most important thing which is included in Human Development Index is Life Expectancy Index. This Index is basically refers to life expectancy at birth not at the age of one year(Infant Mortality Rate).
2. Educational Attainment Index (EAI) :- It is a combination of adult literacy rate and combined enrollment ratio. The weight-age assigned to Adult Literacy Rate(ALI) is 2/3 and to Combined Enrollment Ratio(CER) is 1/3. Therefore Educational Attainment Ratio will be given as :-                                   EAI = 2/3EAI + 1/3CER.
3. Standard of Living Index(SLI) :- It is represented by transformation of per ca pita income. Per ca pita income is converted into Purchasing Power Parity(PPP) in dollars.[post_ads_2]

Final Calculation of Human Development Index (HDI) :-

Human Development Index (HDI) is calculated by taking average of Life Expectancy Index, Educational Attainment Index and Standard of Living Index. The formulae for calculating HDI is given below.

HDI = 1/3 (LEI + EAI + SLI)
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