Theory and measurement of living levels: Some empirical results for the human development index

Abstract

Abstract In 1990 the United Nations Development Programme (UNDP) published the human development index (HDI), a new measure that provides a means by which inter‐country and intertemporal comparisons of living levels can be undertaken. This paper has three objectives. Firstly, the various concepts and measures that can be used for inter‐country and intertemporal comparisons are described so as to put this new measure in perspective with respect to the existing literature. Secondly, the conceptual basis of the HDI is described and it is shown that the index actually calculated by UNDP is, in fact, only one of three possible measures of the general conception of human development stated by UNDP. Thirdly, empirical analysis of the two more important measures of the HDI indicates that there are some important differences between the measures. Absolute values and the ranking characteristics of the three measures of the HDI are examined. These differences may be quite important if the HDI is used as an explanatory variable in economic or social analyses.