Human Development Inde

The HDI has become an important alternative to the traditional uni-dimensional measurement of development. The HDI’s explicit purpose was to shift the focus from national income accounting and towards a people centred measure. It was developed in

1990 and relies on the notion of individual capabilities popularised by Sen.77 Here, the notion of freedom is central to the capabilities approach, as it is the agent of change. Sen emphasises five freedoms: political freedom, economic facilities, social opportunities, transparency guarantees and protective security (Sen, 1999).

The HDI have used Sen’s capability approach as the conceptual framework in their analyses of contemporary development challenges. The HDI is based on the assumption that economic growth does not necessarily equate to human development. Thus, human wellbeing and not national income, is its end goal.

The HDI measures the average achievement of a country in what it calls basic human capabilities. This is achieved by measuring the following values: life expectancy (to lead a long and healthy life), education via adult literacy and enrolment ratio (to acquire knowledge), and standard of living via GDP per capita purchasing power parity (as a measure of command over resources). All three components are assigned equal weighting, and for the education index itself, literacy is given two-thirds and enrolment one-third weighting.

The HDI has three important objectives. Firstly, it breaks the dominance of the GDP as the index of development. Secondly, it shows how far a country has to go to achieve the ideal situation, which equates to one, and finally, it allows for inter-country comparison (UNDP, 1999).

It is also critically important for the current study due to its non-monetary approach to progress measurement. As Robeyns (2005a) asserts, considerable disagreements arise from monetary assessments as to the actual size and particularly the trend of global income poverty and inequality. This, she adds, is in spite of the confident rhetoric emanating from WB press releases.

Mainstream progress measurements, Sen argues, focus exclusively on utilities, commodities, material resources or income. These types of utility-based evaluation of individual wellbeing however, have the tendency to hide important factors, such as

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It would be remiss of this present research not to mention the crucial role Martha Nussbaum played in developing the HDI.

freedoms, rights and human agency (Fukuda-Parr, 2003). For instance, resource-based theories only capture the means to enhance wellbeing; they do not acknowledge that people differ in their abilities to convert these resources into capabilities, due to personal, social or environmental factors (Robeyns, 2003).

The HDI’s capability does not rule out exchange but it does displace it from the core of economics, instead the underlying motivation of the exercise needs to deal with social values (Sen, 1984). In this respect, the HDI differs from most other measures by explicitly acknowledging value judgements that inherently exist in progress measurements via the incorporation of economic, political, legal and other social arrangements into its analysis. Moreover, there is an acknowledgement that individuals and groups may have different values. This acknowledgement enables the HDI to approach progress measurement from both an individual (rational man) standpoint as well as a social (societal capabilities, role of social actors) standpoint (Lehtonen, 2004). In the capability approach, an individual’s characteristic corresponds to the endowments: the collective wealth of an individual at a point in time; resources: the collective wealth available in the economy; and personal attributes: the personal characteristics of that individual (Sen, 1999). These personal characteristics are determined by a person’s mental and physical aspects, which affect a person’s freedom to achieve wellbeing and agency. The social conversion factors consist of social institutions and norms, family, religion, culture, etc., while the environmental conversion factors are determined by the environment where a person lives, such as deforestation which has caused flooding, threatening shelter, etc. (Robeyns, 2005a). Sen’s capability approach is deliberately an open-ended, underspecified approach. For example, it does not specify which capabilities should be included; instead preferring an evaluative approach.78 This standpoint reflects the notion that different countries (people) have a different set of variables affecting its capabilities. This has led some to debate the social merits of the HDI, where the concept of a choosing, reasonable individual, who is constrained by social systems, is paramount. Hence, the choice- utility-freedom framework, which the HDI operates under, has been called ethically

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Martha Nussbaum is one who believes that Sen should endorse a specific list of relevant capabilities (Robeyns, 2005b).

individualistic insofar as it assesses the state of affairs only with respect to the properties of individuals (Gore, 1997). From a SC viewpoint, it is social opportunities that matter. Others such as Robeyns deny this ethically individualistic charge, arguing that the capability approach is not ontologically individualistic, as it does not assume atomistic individuals, or that our capabilities are independent of others (Robeyns, 2005a).

Sen has conceded that the connection to other strands of social science, in particular sociology, could be better developed (Gasper, 2002). Varying degrees of individualism aside, the HDI’s failure to adequately account for social determinants to progress, is a major limitation.

It is with great interest, given the undertaking of the current study, to note that the operationalising procedure of such a multidimensional approach like the HDI has come under attack. Even the Nobel Laureate Amartya Sen cannot escape it. ‘… the HDI is conceptually weak and empirically unsound, involving serious problems of non- comparability over time, space, measurement errors and biases’ (Srinivasan, 1994, p. 241).

The above criticisms are a natural part of progress measurement, where operationalising procedures are always going to come under intense scrutiny. However to make the capability approach more useful, the operationalising procedure needs to move beyond the current narrow conception of economics (Alkire, 2002). This however, is anathema to most statisticians, who view the capability approach with scepticism. To help overcome this problem, any measure attempting this type of analysis needs to be transparent in all stages of its methodology.

The GDI adjusts the HDI for inequality between men and women. Of course, gender inequality is not the only structural inequality facing society. Alongside gender, a case could also be made for factoring class, community or location. The HDI views gender as an important starting point since gender bias can impact on social, economic and political aspects of countries (UNDP, 1995). Results from the Human Development Report (HDR) (UNDP, various years) found that the greater the gender inequality, the lower the country’s GDI, which resulted in the HDI being adjusted downwards.

Although the HDI accepts that income is only a means, the HDI uses GDP per capita as a proxy for most other capabilities beyond survival, education and what those directly reflect. The command over economic resources, which is needed for a decent standard of living, is captured by the logarithm of GDP per capita increased in PPP terms. This implicitly makes the strong value judgement that economic inequality and insecurity do not matter. In fact, it:

… (1) assumes that aggregate share of income devoted to accumulation ‘genuine investment’ is optimal; and (2) sets the weight of income distribution and economic insecurity to zero, by ignoring entirely their influence. (Osberg and Sharpe, 2005, p. 317)

As a result, the capability approach tends to conceal the enormous and still rising economic inequalities that a resource approach makes quite blatant. This supports the present research’s assertions that a greater interdisciplinary approach, such as incorporating both resources and capabilities as a starting point, has the potential to more accurately reflect a nation’s progress.

This weighty reliance on GDP per capita manifests itself via a high correlation between HDI and GDP per capita. For example, both the HDI and the GDI have come under similar criticisms. Dijkstra and Hanmer (2000) computed a scatter plot for 137 developing countries that demonstrated that the GDP and the GDI are closely correlated. Their issue with the GDI was that low levels of human development, even with high levels of gender equality, could not escape a low score on the GDI due to the strong influence of GDP.79

Additionally, McGillivray and White (1993) assert that even with a zero weight, as opposed to the one-third weight normally given to it, GDP per capita still strongly influences both the HDI and the GDI. In fact, the correlation coefficient between the 1991 HDI and GNP per capita was 0.832 for a full sample of 160 countries.80 Cahill updated the studies by McGillivray and White, and the results also showed that the HDI is strongly correlated with GDP (Cahill, 2005). This suggests that the HDI’s capability approach alone is not sufficient in capturing the progress concept, as most of the information about the HDI is captured in per capita GDP. This strong positive

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These findings led Dijkstra and Hanmer (2000) to construct a relative status of women index. 80

The full sample comprises 63 low human development countries, 64 medium human development countries and 53 high human development countries (McGillivray and White, 1993, p. 188).

correlation outcome brings into question just how much additional information, the HDI measure, conveys regarding progress.

The HDI also suffers from its inadequate assessment of NC. There is a general failing of taking into account ecological considerations. Furthermore, their methodology of folding three component indices into one is of concern. This practice hides trade-offs that occur between the various dimensions; especially given that one dimension can make up the deficiency of another (Sagar and Najam, 1998). The release of a refined single measure to embody progress smacks of methodological reductionism (Nelson, 1997), and is contrary to the original spirit of the HDI (Fukuda-Parr, 2003, p. 305).81 Furthermore, both measures (HDI and GDI) are very sensitive to the life expectancy component, where a small change in the scaling and weighting procedures, which change from year to year and reflects the degree of arbitrariness involved, can have a country move from one level of development to another (Srinivasan, 1994). This raises the query regarding whether any changes in the HDI ranking are due to changes in methodology or advancement in human development?

The limitations outlined above shows that the HDI is, as Sen (2002) points out, inescapably a crude index. The HDI, narrowly limited to three capabilities, has led many to surmise that it is biased towards a basic needs approach. That is, where the people’s most fundamental needs is met, irrespective of other factors (Estes, 1992). The basic needs approach argument is somewhat misconstrued however, and points more to a commodities approach rather than a capabilities approach in defining human progress. Overall, the capability approach is a major improvement over standard progress approaches. It opens up other avenues to measure progress, revealing the interconnected determinants that traditional progress measurements cannot capture. The measure goes beyond commodities and towards an interdisciplinary approach. Yet, despite the onset of the HDI, there is still an increasing concern of trying to accommodate the objectives

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Sen was concerned by the difficulties of capturing the full complexity of human capabilities in a single index, but was persuaded by Haq’s insistence that only a single number could shift the attention of policy- makers from material output to human wellbeing as a real measure of progress.

of economic growth, the ecosystem, human wellbeing and excess consumption. The following framework is articulated to capture this.

3.7

Human-Economy-Environment Interaction Conceptual