Living Standards & Development Indicators

The Human Development Index (HDI) is a composite index (combined single-number score) that captures three dimensions of human development: income, health and education. Each country gets an HDI score between 0 and 1; higher = more developed.

The three components

The three are combined into a single score by the United Nations Development Programme (UNDP) each year. Countries are then ranked into very high, high, medium and low human development categories.

Why HDI is a better measure than GDP per capita alone

HDI directly addresses two of the four limitations of GDP per capita.

• It includes health (life expectancy), capturing the non-monetary "you can be rich but unhealthy" dimension.
• It includes education, recognising that a society with high literacy and many years of schooling has higher human capital and broader life chances.

Both health and education matter for living standards in their own right; they are not just inputs to higher future GDP. A country with high GDP but poor health and low schooling will have a noticeably lower HDI than its GDP rank suggests.

Limitations of HDI

HDI is broader than GDP per capita but is not perfect.

• It still ignores inequality unless the inequality-adjusted version (IHDI) is used.
• It does not capture gender equality, environmental sustainability or political freedom directly.
• It puts equal weight on its three components, which is a normative choice.
• It depends on data quality, which is weaker in some developing countries.