Measuring Social and Economic Development

1. Measuring Social and Economic Development A Look at the Human Development Index (HDI)

2. Understanding Indexes • What is an index? • An index is a composite of indicators that produces a single calculation which can then be ranked. Let’s look at some examples!!

3. The Body Mass Index Click here to calculate your own body mass index.

4. The Wind Chill Index

5. The Big Mac Index Click here to watch a short informational video about the “Big Mac Index”

6. Other Common Indexes Click here to see the 2008 rankings Click here to see the indicators that make up the index

7. Economic & Social Indexes • Economic and social indexes are like those we just talked about except they include economic and social data (such as income, educational attainment, health, etc.) rather than wind speeds, body weight, and the like.

8. The Human Development Index (HDI) …is the best known composite index of social and economic well-being…

9. 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

10. 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)

11. 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.

12. 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. Click here to access an interactive HDI calculator.

13. U.S. HDI = .951 What does it mean that the U.S. ranks 12th in the world with an HDI of .951?

14. The IMF’s GDP Per Capita Rankings (2006)Purchasing Power Parity (PPP) As you can see here, the United States has the fourth highest GDP per capita in the world. The question is: how well is the United States using its income to bring about human development? United States ($43,444)

15. The UNDP’s HDI Rankings (2005) United States (.951) Click here to access an interactive graph which shows how some countries do better than others in turning income into education and health opportunities and therefore into higher levels of human development.

16. 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.”

17. 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”

18. Three Issues to Consider When Evaluating Indexes Like the HDI • Validity • Reliability • Parsimony

19. Validity • What is the index supposed to measure? • What indicators make up the index? • Are these the best indicators for this index? • How are the indicators calculated? • Are there better ways to calculate these indicators? • In short, how well does the index actually measure what it is supposed to be measuring?

20. Reliability • Who or what organization collected the data? • How were the data collected? • In short, if you or someone else were to try to replicate the index would you end up with more or less the same results?

21. Parsimony • The whole point of an index is to simplify the measurement of a particular phenomenon. • In short, does the index rely upon as few indicators as reasonably possible without undermining its validity?

22. 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.

23. What’s the Economy For, Anyway?A Project of the Center for Communication and Civic Engagement at the University of Washington.