Troubling Tradeoffs in the Human Development Index

By M. Ravallion. 2010

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The 20th Human Development Report has introduced a new version of its famous Human Development Index (HDI). The HDI aggregates country-level attainments in life expectancy, schooling and income per capita. Each year's rankings by the HDI are keenly watched in both rich and poor countries. The main change in the 2010 HDI is that it relaxes its past assumption of perfect substitutability between its three components. However, most users will probably not realize that the new HDI has also greatly reduced its implicit weight on longevity in poor countries, relative to rich ones. A poor country experiencing falling life expectancy due to (say) a collapse in its health-care system could still see its HDI improve with even a small rate of economic growth. By contrast, the new HDI's valuations of the gains from extra schooling seem unreasonably high -- many times greater than the economic returns to schooling. These troubling tradeoffs could have been largely avoided using a different aggregation function for the HDI, while still allowing imperfect substitution. While some difficult value judgments are faced in constructing and assessing the HDI, making its assumed tradeoffs more explicit would be a welcome step.

Subfields: Economics and Econometrics, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/f8b7d7c5931b63566866c7393602bba9d9dde3c9

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Citations in the corpus

Multidimensional poverty and inequality (2014, unknown): “…class of multidimensional indices proposed by Alkire and Foster (2011a, 2011b), see, among others, Birdsall (2011), Rippin (2010), Ferreira (2011), Ravallion (2011a, 2012a), Silber (2011), Thorbecke (2011), Ferreira and Lugo (2013), Duclos and Tiberti (forthcoming), and the reply by Alkire et…”
Poor, or Just Feeling Poor? On Using Subjective Data in Measuring Poverty (2012, background): “And if one used the US poverty line in India (say) one would find that all but 5% of the population is poor (Ravallion, 2010); it is extremely unlikely that most Indians would agree, and nor does a poverty rate of 95% help much in thinking about how best to fight poverty in India.”
The HDI 2010: new controversies, old critiques (2011, background): “Most notably, Ravallion (2010b) has argued that the tradeoffs implicit in the new HDI should be a cause of concern.”
Ratings and rankings: voodoo or science? (2011, background): “For example, the proponents of the Human Development Index (HDI) advocate replacing gross domestic product (GDP) per capita as a measure of the progress of societies with a combination of (i) GDP per capita (ii) education and (iii) life expectancy, see Ravallion (2010).”
Indicators as a Technology of Global Governance (2010, background): “Sen was one of the principal consultants on the Human Development Report of 1990, which first presented the HDI, and he at first objected to a crude composite index like the HDI, since there was so much other information in the report that was not included in the index (see also Ravallion 2010a, b).”