Sage-Tips

Why is HDI more important than GDP?

They provide a richer picture of progress than gross domestic product (GDP), which relates to a country’s wealth, or even GDP per capita, which tells us something about an individual’s means but nothing about their life outcomes.

What is the main difference between the Human Development Index HDI and gross national income GNI per capita?

The standard of living dimension is measured by gross national income per capita. The HDI uses the logarithm of income, to reflect the diminishing importance of income with increasing GNI. The scores for the three HDI dimension indices are then aggregated into a composite index using geometric mean.

Is HDI a better indicator of economic development?

And living standard is determined by Gross National Income per capita, which forms the GNI index. These three indexes together are calculated into the Human Development Index. Compared to GDP, the HDI has a greater emphasis on human development. GDP is considered a means to human development, but not an end.

How is HDI a good measure of economic development?

The human development index (HDI) assigns numerical values to different countries as a measure of human prosperity. These values are derived by measuring levels of education, standard of living, and life expectancy. Countries with higher scores on the index are said to be better developed than those with lower scores.

What are the benefits of using HDI?

Advantages of using the HDI HDI uses 2 types of social data (health and education) and 1 type of economic data which means that the measure uses a broad range of information and is not tied up with only one measure. This is a much more accurate measure.

Can GNI be used to measure human development instead of HDI?

Can GNI per capita be used to measure human development instead of the HDI? No. Income is a means to human development, not its end. GNI per capita only reflects average national income. It does not reveal how that income is spent, nor whether it translates to better health, education, and other human development outcomes.

What is the difference between HDI and economic growth?

Economic growth is a means to that process but is not an end in itself. The HDI can also be used to question national policy choices, asking how two countries with the same level of Gross National Income (GNI) per capita can end up with different human development outcomes.

What do GNI per capita and HDI rankings tell us about countries?

In fact, comparing the GNI per capita rankings and the HDI rankings of countries can reveal much about the results of national policy choices. Equatorial Guinea with the GNI per capita of $13,944 (PPP$) has a GNI rank of 88, but an HDI rank 145 – almost the same HDI as Zambia whose GNI per capita is only $3,326 (PPP$).

Is the HDI a useful measure of development?

Overall, the HDI has the potential to provide a simple impression of development that can be unpacked to indicate progress with respect to the SDGs. It can be used to complement alternative measures of development.