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Milorad Kovacevic

Human Development Report Ofce, UNDP

Workshop on Measuring Human Development,

 June 14,2013

GIZ, !c"#orn, German$

1

Human Development Index:

Challanges and a way orward

!nited "ations Development#rogrammeHuman Development Report Ofce

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Human Development

$ standard de%nition o human development&'(() HD*+:

%&'( a proce!! o) enlar*+n* people! c"o+ce! tol+ve l+ve! t"e$ "ave rea!on to value' -"e mo!tcr+t+cal one! are to lea. a lon* an. "ealt"$ l+)e, to#e /nole.*ea#le an. to eno$ a .ecent !tan.ar.o) l+v+n*

$ roader de%nition &-)') HD*+:%Human .evelopment +! t"e epan!+on o) people!)ree.om! to l+ve lon*, "ealt"$ an. creat+ve l+ve!5 to

a.vance ot"er *oal! t"e$ "ave rea!on to value5an. to en*a*e act+vel$ +n !"ap+n* .evelopment

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3

• 7ea!ur+n* +! a! more relevant t"an ever

• 8uant+)$+n* an. .e!cr+#+n* our c"an*+n* orl.

• 9+n.+n* a$! o) +mprov+n* people! ell:#e+n*;o In)orme. pol+c$ ma/+n* an. a.vocac$

• Human .evelopment +! an evolv+n* +.ea

•

?oncept!

Measurements Impacts

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4

Human Development Index

mp"a!+@e! t"at outcome! )or people an. t"e+rcapa#+l+t+e! !"oul. #e t"e ult+mate cr+ter+a )ora!!e!!+n* t"e pro*re!! o) a countr$, not econom+c*rot" alone

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C

Human Development Index &Contd.+

< !+mple +n.e Anon:compre"en!+veB +t" t"epurpo!e o)

- +n+t+at+n* .+!cu!!+on!- attract+n* attent+on to +!!ue! t"at prevent

countr+e! )rom per)orm+n* at a "+*"er level- +nternat+onal compar+!on an. #enc"mar/+n*- temporal compar+!on

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/eneral criteria or a good HDI &0oster, -)'1+

AIB ?orre!pon.! to !tron* pol+c$ an. a.vocac$ nee.!• Un.er!tan.a#le an. ea!$ to .e!cr+#e

- Un.er!tan.a#le at a .eeper level +nclu.+n* *oalpo!t! an. *roup:cuto!

- 7ea!ur+n* a#!olute %!+@e o) HD : +n.epen.ent )rom ot"ercountr+e!

• ?on)orm! to a not+on o) "at +! #e+n* mea!ure.-

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/eneral criteria or a good HDI &contd.+

AIIIB -"eoret+call$ u!t+Ee.•  -ec"n+call$ !ol+.

-

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How to anchor HDI values2

•

 -"rou*" normal+@e. var+a#le!: Nece!!ar$ )or compara#+l+t$ on t"e !ame !cale

: Onl$ a)ter re!cal+n* t"e$ can #e com#+ne. +nto a !+n*le!calar = a compo!+te +n.e

• na#le eac" .+men!+on +n.e to ran*e #eteen 0 an.

1

 : net var+a#le

 : re)erence level Aran*eB

• ?ar.+nal +nterpretat+on;- %D+!tance travelle. or

-

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How to decide aout goalposts 2

•

Purel$ .ata .r+ven *oalpo!t! cau!e con)u!+on• Ou*"t to "ave Erm normat+ve #a!+!

• D+erent purpo!e o) *oalpo!t!;

- Upper Aa!p+rat+on levelB

- ma$ c"an*e per+o.+call$ #ut +n)re6uentl$, 3 4 ') years,

normat+ve tar*et!: In a con!tra+ne. a$ Aor proport+onateB

5

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How to decide aout demarcation cut5o6s orcategori7ing countries into di6erent levels o

HD2

• 9+ a#!olute .emarcat+on cut:o! )or cate*or+@+n*countr+e!

-

?"oo!e relat+vel$, t"en E a#!olutel$, or- oo/ +t"+n var+a#le! )or natural cut:o!

• ?ut:o! are ala$! aritrary

: +/e povert$ l+ne!, l+/e m+..le cla!! ran*e!

• >ut +) Ee. over t+me, countr+e! can progress

: ?on!+!tent cut:o! can #e ma+nta+ne. over t+me

10

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Changes in the HDI introduced in -)')

11

/oal posts

Minima:9+e. at%natural@ero!

Maxima:O#!erve.ma+ma!+nce1M0

Comments: •< po!!+#le c"an*e o) ma+ma ever$$ear5

•HDI level o) ?on*o .epen.! on o) Japan, e.ucat+on +n U< an. GNI o)8atar AQB

/roup cut5o6s &relative+Cut5o6s:8uart+le! o)HDI.+!tr+#ut+on

/roups:8uart+le*roup!o) e6ual!+@e

Comments:•+ttle movement mo!tl$ +t"+n t"e *roup• -o move to t"e "+*"er 6uart+le, anot"ercountr$ "a! to move to t"e loer

•Pro*re!! a*a+n!t ot"er countr+e!, rat"ert"an a*a+n!t ar#+trar$ numer+cal cut:o!

•9u@@$ +ncent+ve!, le!! pract+cal value )ort"e countr$

HDI value and rank: change etween two years

Due to;• Real c"an*e +n per)ormance• Data rev+!+on

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12

8ogarithmic transormation o income

S D+m+n+!"+n* mar*+nal ut+l+t$ o) +ncome

    0

 .    0    0    0    0    1

 .    0    0    0    0    2

 .    0    0    0    0    3

 .    0    0    0    0    4

 .    0    0    0    0    5

    D   e   n   s    i    t   y

0 20000 40000 60000 80000 100000

GNIpckernel = epanechniko! "an#$i#th = 3.5e%03

GNIpc

    0

 .    1

 .    2

 .    3

    D   e   n   s    i    t   y

4 6 8 10 12

ln&nikernel = epanechniko! "an#$i#th = 0.3'60

ln(GNIpc)

    6

    8

    1    0

    1    2

    l   n   &   n    i

0 20000 40000 60000 80000GNIpc

*o& trans+or,ation

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HD*9 13

8ogarithmic transormation in otherdimensions

•  -"ere are ar*ument! )or an. a*a+n!t tran!)orm+n* t"e"ealt" an. e.ucat+on var+a#le! to account )or .+m+n+!"+n*return!

• Healt" an. e.ucat+on are not onl$ o) +ntr+n!+c value5 t"e$,l+/e +ncome, are +n!trumental to ot"er .+men!+on! o)

"uman .evelopment not +nclu.e. +n t"e HDI•  -"e+r a#+l+t$ to #e converte. +nto ot"er en.! ma$ l+/e+!e

+ncur .+m+n+!"+n* return!

    3 .    '

    4

    4 .    1

    4 .    2

    4 .    3

    4 .    4

    l    l   e

50 60 -0 80 '0le

*o&(*) s. *

    0

 .    0    1

 .    0    2

 .    0    3

 .    0    4

 .    0    5

    D   e

   n   s    i    t   y

40 50 60 -0 80 '0le

kernel = epanechniko! "an#$i#th = 2.-42-

*i+e /pectancy

    0

    1

    2

    3

    4

    D   e

   n   s    i    t   y

3.8 4 4.2 4.4 4.6lle

kernel = epanechniko! "an#$i#th = 0.0388

*o&(*)

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$lternative transormations or variales2

• +mpl+c+t$ +! ala$! #etter• >$ tran!)orm+n* var+a#le! +t +! "ar.er to +nterpret c"an*e on

t"e *roun. +t" c"an*e +n t"e +n.e = +t +! a )unct+on o) t"enormal+@e. tran!)orme. var+a#le!Q

• No po!!+#+l+t$ )or !u#*roup .ecompo!+t+on

• ?"a/ravart$ A2003B +t" all var+a#le! tran!)orme. #$ acommon concave )unct+on

14

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1C

$ggregation: /eometric mean

• No per)ect !u#!t+tuta#+l+t$ : re.uce. !u#!t+tuta#+l+t$

•

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1

$ggregation: /eometric mean

Criti?ues: 

• < ell roun.e. per)ormance acro!! .+men!+on! +! not are6u+rement +t"+n t"e "uman .evelopment approac"

• DevelopmentF*overnment pol+c+e! !"oul. not #e)ocu!e. on ma+m+@+n* t"e HDI

• ?"an*+n* o) a!p+rat+on level! !"oul. #e .one+n)re6uentl$ an. +) +t +! .one proport+onall$ Aa !lope:+nvar+ant l+near tran!)ormat+onB, ma+ma .o not +mpactran/+n* #$ t"e ar+t"met+c mean #a!e. HDI

• H+*" .+!cr+m+nat+on poer +! #a!e. on t"e accounte.

+ne6ual+t$ acro!! .+men!+on! "+c" +! not a! +mportanta! t"e +ne6ual+t$ +t"+n .+men!+on an. acro!! populat+on

• No .ecompo!+t+on #$ .+men!+on nor #$ !u#populat+on

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1

$ggregation: $rithmetic mean

• a!$ +nterpretat+on

• Decompo!a#+l+t$ #$ .+men!+on

• Per)ect !u#!t+tuta#+l+t$;

: a lo ac"+evement +n one .+men!+on +! l+nearl$

compen!ate. )or #$ a "+*" ac"+evement +nanot"er .+men!+on

@x. HDI;).: &)., )., ).+, &).3, )., ).+

5 ?on!tant tra.eo! #eteen non:+ncome .+men!+on• o .+!cr+m+nator$ poer

 

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1M

• ?"an*+n* t"e )unct+onal )orm ma$ cau!e #+* c"an*e! +nt"e HDI value! an. ran/! e!pec+all$ +n t"e loer en. o)

.+!tr+#ut+onample;8@ @D! /"I Atde

vHDI&geometric+

HDI&arithmetic+

7al+ 4 20 34 11C 3C A1CB 31 A1B

+#er+a CM0 43 140 22C 32 A1M2B 3M A1CB

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1

Aummary o recommendations' 

• Revert to t"e or+*+nal ar+t"met+c )ormula

• +t" Ee. m+n+ma A@eroe!B

• +t" a!p+rat+onal cut:o! con!tra+ne. an.up.ate. +n)re6uentl$

• +t" lo* o) +ncome component

• +t" Ee. cut:o! #eteen *roup!

 TTTTTTTTTT 1 2n. ?on)erence on mea!ur+n* "uman pro*re!!, 7arc" 4:C, Ne or/

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 -"an/!7+lora./ovacev+cVun.por*