The Human Development Index

The Human Development Index expresses the capabilities of people’s potential achievement. The index is calculated using data regarding people’s lifespan, education, and income. By using both financial and non- financial factors, it paints a deeper picture of the lives and issues in a region. For example, a nation with high income but low education will still have difficulty in overall opportunity. This approach was developed by Pakistani economist Mahbub ul Haq, who produced the first annual Human Development report, which captures and illustrates development issues and changes each year.

The Human Development Index and its derivative, and extensions like the Inequality-adjusted Human Development Index (IHDI), were developed to center people—not just finances—as the core determinants of a nation’s or region’s discussions about economic opportunities, support, and policies. The index considers three main dimension (categories)—which are health, knowledge, and standard of living (income)—to calculate an individual value for each dimension, which is then averaged to produce the final value. (Under decent standard of living, GNI stands for gross national income, and PPP stands for purchasing power parity, both of which are key indicators of income and relative wealth.)