By Steve Ninvalle in New York
Stabroek News
April 29, 2001

As stated last week, in international circles the family of UNDP's human development indicators rival the World Bank's US$1 and US$2 per day as approximations of the state of global poverty. My task this week is to explain the basic features of the UNDP indicators, so that we are in a position to appreciate what they seek to represent, and can therefore participate intelligently in the on-going debates on global poverty.

The Human Development Index

The US$1 and US$2 per day are essentially income measures of poverty. In contrast, the celebrated UNDP indicator of human development, the HDI index, while it includes an income measure, this income measure is very different from the standard per capita daily expenditures. In addition, the HDI contains two other measures, one related to a healthy life and the other to knowledge. How is this accomplished? In the case of a healthy life, the UNDP uses as a proxy measure, life expectancy at birth. In the case of knowledge, the proxy measure used, is a combination of adult literacy (two-thirds weight) and the proportion of persons of school age enrolled in primary, secondary, and tertiary educational institutions (one-third weight). In both the case of adult literacy and the gross enrolment ratio in educational institutions, the variation is on a scale from 0 to 100 per cent. In the case of life expectancy the range is established differently. It is derived from the minimum average life expectancy for the worst performing country over the past 30 years, and the maximum average life expectancy the best performing country is projected to attain over the next 30 years. The latter projection is based on the best information available from expert medical opinion. This range is re-calculated from year to year. For the year 2000, the range was from 25 years minimum to 85 years maximum, that is, a range of 60 years. A country's life expectancy index is then calculated as the difference between its own life expectancy and the minimum of 25 years, expressed as a fraction of the range of 60 years. So that a country whose life expectancy was 65 would yield a fraction of 0.67, i.e. (65-25)/60.

The income measure, however, is not as simple and straightforward a calculation. In fact, to be precise, it is a standard-of-living indicator, which is used as a "surrogate" for all aspects of human development, excepting a long and healthy life and knowledge. The income indicator is also based on a very crucial assumption, which we should be aware of. It assumes that, in order to achieve a "respectable" level of human development, one does not have to be extraordinarily rich. In which case, income beyond a certain minimum level should be discounted in value at an increasing rate of discount, as income increases in size! The UNDP's income measure does this and the income is then expressed in terms of constant purchasing power dollars (PPP$).

Similar to the health indicator, a range of incomes is established each year. For 2000, that range had at its minimum, the lowest national per capita income over the past 30 years and the highest projected per capita income over the next 30 years, both calculated as discounted income in PPP$. The range was therefore, from a minimum of PPP$100 to PPP$40,000.

The human development index is then calculated as the simple average of these three indicators, income, knowledge, and longevity. The HDI has been calculated for 174 countries and the results presented in the UNDP 2000 Report. Based on the results, countries have been classed into three groups; namely, high, medium, and low levels of human development. They are also ranked on a scale from 1 to 174. In 2000, countries ranked 1-46 fell into the high level of human development. Countries ranked from 47-139 fell into the medium level of human development. And, countries ranked 140-174 fell into the low level of human development. The average indexes for the three classes of high, low, and medium levels of human development were 0.421, 0.673 and 0.908 respectively on a scale of zero to one.

The Human Poverty Index

Because the HDI not only refines the income measure, but adds the dimensions of longevity and knowledge, it is in many ways a far superior indicator of human development, than per capita income. However, it should be recognized that while the HDI measures human development, it does not directly measure human poverty. To correct for this anomaly, the UNDP developed the Human Poverty Index for developing countries (HPI-1). This index uses the same three variables, in order to measure how persons are deprived of these. The deprivation indicators are as follows. Deprivation from a long life is measured by the percentage of people not expected to survive to age 40 in a country. Deprivation of knowledge is given by the percentage of adult persons who are illiterate. And, the deprivation of a standard-of-living is taken as the percentage of persons who do not have access to two items, safe water and health services, as well as the percentage of children under five who are severely-to-moderately malnourished.

The premises of the above approach are that the vulnerability of a country's population is reflected in the amount of persons who do not survive to age 40, and so die at a relatively early age. Similarly, the percentage of illiterate persons indicates the amount of a country's population that is excluded from the world of reading and written communication. And, finally, the third deprivation measures the extent to which the population does not enjoy very basic economic provisioning.

Features

There is a refinement of the Human Poverty Index, for poverty in the already developed economies. This we shall pursue next week. At present, I wish to draw attention to certain features of the HDI and HPI-1 indicators. One is that it would be tempting, but wrong, to suggest that they are too 'simple.' If one reflects on it, an indicator such as life-expectancy, simple as it is, tells us a lot about a country. For example, if life-expectancy is high in a country then we know that that country has been able to avoid war and social conflict, the spread of pandemic diseases, and starvation through food insecurity. It also tells us that medical services are satisfactory as infant mortality is low, death in reproduction low, and life-threatening communicable diseases are under control. It tells us too that the quality of nutrition, the level of education, the participation of the population in fitness, recreation and sports are all satisfactory. In fact if you thought carefully about it, an entire article of this length would not exhaust all the important implications of the life-expectancy age of a country. In many ways therefore, it is a truly excellent indicator of the level of human development attained in a country.



A second feature is that as a result of academic exchanges and articles written about the UNDP's methodology, improvements have been made from time to time. However, the UNDP has to walk a fine line between refining its measures for greater relevance and accuracy, while ensuring that the series remains comparable through time. Already in some instances, changes in the UNDP methodology have led to changes in the results for countries, which affect their ranking. A case in point is the recent change in the way future income is discounted. That has led to Barbados no longer being at the top of the league of developing countries. That position is now held by Singapore. However, Barbados along with the Bahamas and Antigua-Barbuda are three Caribbean countries found in the group of countries with high levels of human development.

Next week we shall continue this discussion and consider the other indicators in the UNDP family of indicators.