6.2.6 Interview of Selim Jahan, part I: History of the Human Development index, and its major strengths and weaknesses

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Global Statistics - Composite Indices for International Comparisons

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University of Geneva

Global Statistics - Composite Indices for International Comparisons

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The number of composite indices that are constructed and used internationally is growing very fast; but whilst the complexity of quantitative techniques has increased dramatically, the education and training in this area has been dragging and lagging behind. As a consequence, these simple numbers, expected to synthesize quite complex issues, are often presented to the public and used in the political debate without proper emphasis on their intrinsic limitations and correct interpretations. In this course on global statistics, offered by the University of Geneva jointly with the ETH Zürich KOF, you will learn the general approach of constructing composite indices and some of resulting problems. We will discuss the technical properties, the internal structure (like aggregation, weighting, stability of time series), the primary data used and the variable selection methods. These concepts will be illustrated using a sample of the most popular composite indices. We will try to address not only statistical questions but also focus on the distinction between policy-, media- and paradigm-driven indicators.

From the lesson

Liner shipping connectivity indices (UNCTAD) and Human development index (UNDP)

During this week you will be exploring two indices. The first index, the Liner Shipping (Bilateral) Connectivity Index (LSCI/LSBCI) computed each year by UNCTAD since 2004. It provides an overall indicator of a country maritime connectivity related to liner shipping. Throughout this lesson, we give some insights on why the LSCI and LSBCI were developed. We also cover the methodology to build both indices. We then discuss some stylized facts. The second index presented this week is the Human Development Index (HDI) developed by UNDP. During this lesson, you will be slightly introduced with the history of the HDI. We explain the steps of constructing the HDI, i.e. choosing the three dimensions (health, education and living conditions) composing the HDI and their respective indicators, normalizing the indicators and aggregating the indicators and dimensional sub-indices using different methods. Then, we use a practical example to calculate the HDI for one country. At the end, we discuss some limitations of the HDI and give some elements for future improvement.

6.2.1 Introduction and motivation for the Human Development index9:02

6.2.2 Indicators: selection and data issues12:18

6.2.3 Aggregation, methods and reasoning11:43

6.2.4 Interview of Flavio Comim: A response to the common criticisms of the HDI9:56

6.2.6 Interview of Selim Jahan, part I: History of the Human Development index, and its major strengths and weaknesses10:19

6.2.7 Interview of Selim Jahan, part II: Other indices in the Human Development Report (HDR), and future of the HDR13:50

Meet the Instructors

Stefan Andreas Sperlich
Professor
GSEM, Research Center for Statistics
Juan Manuel Rodriguez Poo (in Partnership with UNIGE)
Professor
Departamento de Economía, Universidad de Cantabria

[MUSIC]

Today, we are going to talk about human development and its measures.

It's my great pleasure to welcome Selim Jahan, the director of

the Human Development Report Office at the United Nations Development Program in

New York, to our massive open online course on global statistics.

Good morning, Selim, and welcome to our course.

>> Thank you. >> Let me straight away go to my first

question, which is on the historical aspect.

Can you briefly recall for us the circumstances and the motivation behind

the launch of the first human development report by UNDP in 1990,

which included a definition of the concept of human development

as well as a measure of the concept, namely the human development index?

What do you think were the gaps that exist at that time, that this report,

and the index, and the concept filled compared to other development

indicators that were prevalent at that time?

>> I think that's a very good question in terms of historical context.

1990 was the time when there was this structural adjustment,

particularly in Africa and Asia.

And we know that through the structural adjustment,

economies were adjusted at the cost of people's lives.

There was also the second thing.

The economic growth paradigm was dominating the economic thought at that

point in time.

So because of all these things, I think people are pushed towards more to

the periphery, and the concentration was more on economic components.

So it was thought that this was the time when there should be a new thinking

in terms of economic paradigm

as well as to bring back people to the center of development.

And that is precisely why the human development concept, and

the human development report, emerged with that very clear notion

that the real wealth of a nation is its people, and

developments should be for the people, of the people, and by the people.

So I think the major motivation to bring out the human development report

was this particular point that there should be people-centered development.

And you've talked about the measure also.

We thought at that point in time that it's not enough just to talk about a concept.

But it is also necessary to come up with a particular measure, and

the human development index, which is the crown jewel in the whole human development

report and also the human development thinking in terms of measurement,

actually tries to measure the human well-being from a broader perspective.

It does not take its focus only on the economic opulence.

But also looks at other aspects of human lives in which human beings value.

>> Thank you very much for this historical perspective.

And let me also congratulate HDRO and UNDP for

having launched this initiative some 25 years ago now.

And having actually shifted the development paradigm to a completely new

level and putting, as you said, people at the center of this discussion.

Now, let's consider the human development index in itself, and

it has become almost a brand name associated with UNDP.

And also consider the theoretical basis of it, which is the capability of.

According to this approach, development is the expansion of the freedom of

an individual to choose the life that he or she has reason to value.

So how do you think that this capability aspect is reflected in this index?

And in other words, what are the major strengths of this index?

I think the human development index is a measure of functionings, actually.

And functionings are the things that people value to do or to be.

For example, a long and healthy life, knowledge, a decent standard of living.

And we also know that capabilities are kind of the set of functionings that

people choose.

So, being a measure of functionings in the first place,

the HDA then, by default, becomes a measure of capability.

And that is their linkage.

And we also know that the capabilities,

by reflecting the choice that you have, represents freedom.

And in that sense, development is freedom.

So, the HDA, first of all, being a measure of functionings,

is also a proxy for being a measure of capability.

So that is how the capability approach is reflected in the human development index.

In terms of its strengths, I think the first thing is that it is a broader

measure of human well-being, going beyond the income per capita, for example.

It may be as vulgar as GDP per capita, but it is not as blind as GDP per

capita to the broader aspects of human lives.

The second strength of it, it is simple,

because you may come up with a particular composite index.

But if it is too difficult to explain it to policy makers,

to people, then it loses its value, and also its credibility.

So the second strength of the HDA is it is simple.

Third, I believe that the methodology is quite straightforward.

So there is also the score for experimenting with it.

For example, you can keep the dimensions of it as it is, and

then you can also choose different kinds of indicators to reflect those dimensions.

And a lot of national human development reports have also done it.

Fourth, I think, its strength is that it can be used for advocacy purposes.

In fact, a lot of the civil society organizations in different countries

have used it for advocacy purposes for

pressuring governments to change their expenditure patterns,

to undertake different sets of policies, and all kinds of things.

And finally, its strength lies in the fact that it can be disaggregated.

It can be disaggregated between men and women, and

in terms of regions in a large country, in terms of ethnic groups, in terms of race.

And that basically can give you a more complete picture of the kind of human

development achievements that the society, as a whole, has made.

Average can mask a lot of things.

But by disaggregating, you actually have a true picture of where the pockets of

deprivations are, which groups of people are marginalized.

I think that's a great strength of the HDI >> Okay,

now, let me go to the other side of the coin.

Imagine for a moment that you are an outsider as far as UNDP or

HDRO is concerned.

What do you see are the possible shortcomings, if there are any,

of this index, and how would you address them?

>> Well, I believe in self-criticism, and I'm a reflective person, so

I don't have to be an outsider.

Even as an insider, I think we are very much aware, and

I also recognize some of the shortcomings of the HDI.

To start with, as you know, that this is a composite index, and

the composite index always has its weaknesses.

A composite index sometimes is not very robust.

A composite index sometimes loses it's predictability,

if you add too many indicators or variables to it.

So the human development index, or the HDI,

also shares the kind of weaknesses of the composite index.

That's first.

The second problem with this particular index is that a lot of the indicators

included in this index are stock variables, and

they are not flow variables.

So as a result, I think they changed very little over time.

And that is a frustration that many countries and

the policy makers feel, because they are undertaking policies,

they are undertaking measures to improve the lives of people.

But even then, those are not reflected in some of the indicators.

For example, life expectancy at birth doesn't change overnight.

It takes time, it takes a lot of events to happen to change that particular thing.

I think that is its second weakness.

The third weakness, I would say, of this AGI,

is it give sometimes equal widths to different dimensions.

And I think lots of the experts have said that, well,

there are always hierarchy of choices, and neither individuals nor

societies value all those indicators, all those dimensions equally.

And if that is true, then there has to be some kind of a weight,

not equal weights, that need to be explored.

Whether in a particular situation, those weights change.

But the problem with those kinds of weights is that it is a social choice, and

sometimes you don't know the social choice.

Which is valued more, which is valued less?

And I think the human development index also avoids that question by making that

assumption that the dimensions included in that particular index are equally valued.

Whether it is valued or not, that's a separate issue.

But I think to start with, that gives kind of a starting point for that index.

So I think in particular, these are the sum of the weaknesses of this index.

>> It is interesting that you bring up the point of the weights,

because the weights also mean that there is the aggregation of the composite index.

It means also there is substitutability.

And then, the question arises as to how many dollars, one year,

extra year of life is equivalent to how many dollars, and

then that could raise some ethical questions and other things.

[MUSIC]

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