Why Hong Kong, Japan and Iceland, and not Norway, Switzerland and Australia, Are the Best Countries for Human Development

Since its introduction in 1990, UN's Human Development Index (HDI) has contributed to shifting our understanding of development away from a purely economic view, toward a more diverse one, combining data on health, schooling and economics. HDI, though, has its flaws, according to a new study co-authored by Simone Ghislandi, an Associate Professor at Bocconi University's Department of Social and Political Sciences, and it could be conveniently replaced with a new and simpler Human Life Indicator (HLI).

The new index takes into account only the inequality-adjusted life expectancy at birth: at life expectancy parity, i.e., a country with many disadvantaged people dying young and many rich people dying old is considered worse-off than a country with all the population living about the same age. Even if the two indexes are highly correlated (0.93), HLI also measures the progress toward reducing inequality in human development.

«Replacing a set of indicators with a single one makes sense because the components of the HDI are correlated and picking one doesn't imply a major loss of information», prof. Ghislandi says. Furthermore, life expectancy is the right choice because it's the most reliable among HDI's components. Finally, HDI implicitly assumes that life has a different value in different countries. «As the same HDI score can be reached with different combinations of life expectancy and GDP per capita, tinkering with data you can observe different economic values for one year of life in different countries», Prof. Ghislandi continues.

The new indicator produces an earthquake in the development ranking, with significant loss of positions, compared to HDI 2018 revision, for rich but unequal countries (the US drops from 13^th to 32^nd, Australia from 3rd to 10^th, and Germany from 5^th to 25^th) and gains from more equal ones (Japan jumps from 19^th to 2^nd, Spain from 26^th to 5^th, and Italy from 28^th to 6^th).

Simone Ghislandi, Warren Sanderson, Sergei Scherbov, A Simple Measure of Human Development: The Human Life Indicator, in Population and Development Review, 6 November 2018, DOI:10.1111/padr.12205.

Changing Rankings

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