The Human Development Index: "Handle with Care"

Abstract

ECONOMISTS AND POLICYMAKERS have long questioned the emphasis on growth of gross national product per capita (GNP/N) as the singular goal and measure of national development. GNP/N fails to capture the distribution of the benefits of economic progress-in particular, the number and condition of persons living in poverty; and it abstracts from a multitude of specific factors that relate directly to welfare-for example, the benefits of health, education, and political and social freedoms. The arguments advanced in favor of using the GNP/N goal and measure have been its simplicity, the assertion that it represents a reasonable proxy for several dimensions of welfare, and most importantly, the absence of an alternative single measure that better approximates in the aggregate. Such an alternative measure has recently been offered by the United Nations Development Programme (UNDP) in its Development Report 1990 (HDR) (New York: Oxford University Press), which unveils a Human Development Index (HDI). The UNDP appropriately recognizes the considerable difficulty in conceptualizing and measuring the somewhat nebulous condition of development, and thus notes that the HDI opens the debate (p. iii) that will result in refinements of both the analytical framework and the empirical inputs over time. I propose to participate in that debate. I will challenge the usefulness of the conceptual framework of human development as specifically represented in the HDI, illustrate the sensitivity of this measure to plausible refinements, and argue that it offers only limited insights beyond those obtained by small modifications to simple measures of economic output. Until the conceptual underpinnings of the HDI are more firmly established, analysts and policymakers are better served by using much simpler measures and