A New Approach to Human Development Index

Abstract

Human development Index (HDI) was introduced by the United Nations Development Programme (UNDP) in 1990. For the first four years UNDP used the maximum and the minimum values of the data series to standardize the variables. In 1994 the procedure of standardization was modified with the introduction of arbitrary fixed minimum and maximum values for each variable. Both methods have merits and demerits. The present study proposes an alternative measure of estimating HDI which bridges the gap between the methods of computing HDI proposed by the UNDP in 1990 and 1994. This study also incorporates unadjusted per capita real gross domestic product (PCRGDP) instead of adjusted PCRGDP used by the UNDP. The data from the Human Development Report (HDR) 2000 for 174 countries are used to test the robustness of the suggested index and the results are compared to those of the HDI. Also average values for full sample as well as top 20 percent and bottom 20 percent are offered to show the superiority of our method to that of the UNDP's HDI.