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The Human Development Index

The most foundational target of economic and social development is becoming more contentious issue recently. For a long time, per capital income levels were considered a central indicator of development. However, this conception has significant faults due to it only account for economic activities in the market without consider the equitable income distribution as well as sustainable environment and society (Fuchs, 2009). UNDP established the Human Development Index to in 1990, which is a widely accepted framework to measure the human development (Anand and Sen, 1994). However, this method has been criticized for it still having a market-liberal bias. An increasing number of experts called for an alternative method with consideration of cultural, social, and environmental (Kanbur, 2002). Today, by focusing on sustainable development, happiness and wellbeing, New Economics Foundation (NEF) introduced Happy Planet Index in July 2006, designed to challenge the previously established indices, such as Gross Domestic Product (GDP) and the Human Development Index (HDI) (The Happy Planet Index 2.0, 2009).

As a result, the question of whether the UNDP replace the HDI with the HPI to rank countries by level of "human development" is becoming an interesting one. This paper will discuss a core approach for measure development, compares with other frameworks for progress. Then it will examine the HDI and HPI by this measure respectively, arguing that although HPI is imperfect, it is more suitable than HDI to measure the development of social recently.

Factors to measure human development

Although the meaning or conceptualizations of human development is various, we can see that the trends of development are from growth to sustainable development to happiness and well-being.

As regard as the traditional conceptualizations of development, main indicator to measure whether a country was developing was always using of the rate of growth of per capita national income, such as Gross Domestic Product (GDP), Gross National product (GNP) or Gross National Income (GNI) (Kingsbury 2008).In late 1969, Dudley Seers (cited in Kingsbury, 2008) rejected this view and pointed that development is to realize the potential personality. Development should fulfill the human potential capability include adequate education levels, freedom of speech and national political and economic power (Seers 1973). Moreover ILO (1976 cited in Kingsbury, 2008) led to a new meaning by identified five categories of basic human needs: basic goods, basic services, participation in decision-making, the fulfillment of basic human rights and productive employment. In 1990, UNDP defied human development as “a process of enlarging people’s choices” (HDR, 1990).

As the increasing level of economic activities have obviously negative impacts on the natural resources and environment, the “natural capital” needs to be taken into consideration in the measurement of development (Dieren, 1995 cited in Kingsbury, 2008). The Brundtland Commission (1987) asserted that when pursuit of economic, both environmental and social objectives are necessary for sustainable development. Sen (1999) also notes that “we should leave the future generations able to enjoy the common stock of natural assets and resources without contaminate and use up”. Improvements in sustainability require consuming less natural resources and changing towards to the eco-friendly of development (Tukker, 2006 cited in Kingsbury, 2008).

Alkire (2000 cited in Kingsbury, 2008) provides an excellent and comprehensive assessment of human development dimensions, including Sen’s contributions, which is now widely described as the human well-being. Recently by assuming that the most basic objective of national development is to improve the well-being of countries’ citizens, these approaches combine knowledge of sociology, psychology, economics and political theory and consider the level of human being’s subjective life satisfaction as the fundament aspect (McGregor 2006 cited in Kingsbury, 2008). That means they focus on what people need and the individual development. In addition, as some authors highlight the psychological factors and social relationships, Bonini (2007 cited in Fuchs, p.5) argues that “individual characteristics are supposed to have a larger determinative effect on life satisfaction than national wealth, human development and environmental conditions”.

From these discuss above, we can conclude that the measure of development could focus on two aspects, which are human system and ecosystem.

As Giovannini (2009) mentions a framework of the progress of societies

Source: OECD ----framework for the progress of societies

Combining with all the discussion above, we could measure the ecosystem by four factors:

• Air (atmosphere)

• Water (hydrosphere)

• Land (geosphere)

• Biodiversity (biosphere)

On the other hand, we could measure the human system by six factors:

• Physical and psychological health

• Knowledge and education

• Work and employment

• Material well-being and income

• Freedom and self-determination

• Social relationships

So, the paper will examine the efficiency of HDI and HPI by this framework respectively.

Human Development Index

Components of HDI

According to the Human Development Report (2010), the Human Development Index (HDI) is a summary measure of human development. It is a frame to measure for development both on social and economic aspects. “The HDI sets a minimum and a maximum for each dimension, called goalposts, and then shows where each country stands in relation to these goalposts, expressed as a value between 0 and 1”(HDR, 2010).It composes with three factors:

Education and knowledge

It consists with the mean of years of schooling for adults and expected years of schooling for children. Calculating the mean years of schooling is based on the different length of schooling at each level. Expected years of schooling are based on the enrolment and the population of official school age at various degree of education.

Heath and long life

Life expectancy is “the expected (in the statistical sense) number of years of life remaining at a given age” (Sullivan,2003, p.473 ). In HDI, it calculated the life expectancy at birth by using a minimum value of 20 years and maximum value of 83.2 years. These indicators are the observed maximum value from global countries from 1980 to 2010. Thus, if a country where life expectancy birth is 55 years, the life expectancy index would be 0.554.

The standard of living

It measured by GNI per capita (PPP US$) instead of GDP per capita (PPP US$) in 2010. Comparing with Gross Domestic Product (GDP) which is the whole monetary value of goods and services produced in a country, Gross National Income (GNI) illuminates the income accrued only to the residents of a country, which includes international flows which invested in and excludes the income which repatriated abroad. The goalpost for minimum income and the maximum are $163 (PPP) $108,211 (PPP) respectively (HDR, 2010).

Critique of HDI

According to the framework of the progress of societies, it is clear that HDI has some limitations. As Sen (1994) argued that the well-being and freedom are diversity, which influenced by variety of factors such as political, economic, social and law. The HDI is based on “a heroic selection” and put the focus only on few of these factors, while totally neglecting others. Neither contentment nor psychological state of individuals is captured, it also ignore some measure of subjective well-being or ‘happiness’ (Blanchflower, 2005 cited in Fuchs, 2009). Moreover, without measuring political freedom, guaranteed human rights, equal distributional aspects and self-respect, it also lacks some important environmental indicators which affect the human development index such as access to safe water, access to fresh air and other environmental conditions (Desai, 1993 cited in Fuchs, 2009).

Furthermore, UNDP’s HDI is estimated with adjusted GNI per capita figure. It means high incomes contribute insignificantly to human development. In many instances, countries with higher human development index always have higher average incomes,which contribute to higher average life expectancies, lower mortality and higher literacy rates. Mazumdar (2003) argues that the application of the adjusted GNI figure could artificially widen the gap between the rich and poor countries. GNI only counts monetary transactions, it miss many activities that people value like caring for children. The value of leisure time spent relaxing or with family and friends are also ignored. Excluded the value of nonmarket activities such as household work and volunteer contributions, but the reconstruction effort of hurricane or earthquake destroys is counted as a boost to GNI. So GNI includes many items that do not boost human wellbeing. If we accept the view of the UNDP that human development is about ‘‘expanding people’s choices,’’ we have to agree with that ‘‘it is quite difficult to ascertain why additional income does not enlarge people’s choices” (Mazumdar, 2010, p.239).

Happy Planet Index

Components of HPI

The UK’s “new economics foundation” publishes a Happy Planet Index (HPI) which looks for countries where people live longer and happier lives without damaging the planet in 2006. According to the HPI 2.0(2009), there are two main separate indicators:

Happy Life Years (Life satisfaction and life expectancy)

In respect to the concept of happiness, the intangible concept of life satisfaction is measured through by variety kinds of surveys. Individuals’ responses relative with the conditions of their social networks, relationship status, educational level and presence of disability. In addition, their material conditions are also included, such as income and employment situation. Higher levels of social capital and living standard, comfortable climate and abundant natural resources, higher life expectancy and more democracy all can leads one countries to get higher life satisfaction. Furthermore, well-being is correlated with these responses. In these surveys, people satisfied with their life by using some positive assessments, such as reporting frequently nice moods and harmonious relationships with family. Importantly, the life satisfaction also correlates with majority aspects of well-being described before, such as feeling freedom and self-determination.

Life expectancy is an average number of years that a newborn has the probability to live, based on social, environmental and economic conditions, calculated with the mortality rates for different age groups.

The Ecological Footprint (EF)

It is a resource accounting tool which “measures the extent to which the ecological demand of human economies stays within or exceeds the capacity of the biosphere to supply goods and services” (HPI, 2009). The EF also estimates the quantity of land area required to keep a given population at a certain level of consumption with technological development and resource efficiency (Kitzes, 2006 cited in Campus 2010). This measure is informative as human resource consumption exceeds Earth bio-capacity. The Global Footprint Network is the main source for EF. From the report, it shows that higher income countries usually have a higher EF such as USA and France are 9.6 and 5.6 respectively. In contrast, the average EF index of medium income countries is 1.9.

Critique of HPI

The most controversial issue is that ‘Happiness’ or ‘life satisfaction’ are very subjective and personal because cultural and complex impact of personality can influence on happiness (Triandis, 2002). Reported happiness is a very tricky concept which is easily to make data-collection errors when used to measure whole societies (Steffen, 2006). We can see some major measurements of societal well-being are completely neglected with this method such as the protection human rights, governmental transparency and relative economic justice. For instant, Vietnam and Columbia are high on the list. However, they are not suitable for other countries to aspire. In Columbia corruption is rampant and there are escalating attacks on human rights recently. Besides, the sweatshops in Vietnam are proliferating so as to threaten the democracy advocates and ethnic minorities (Steffen, 2006).

Furthermore, The Ecological Footprint is a controversial concept with many criticisms. “It fails to address the sustainability of consumption that it was originally conceived to do” (Fiala, 2008, p. 522). To illustrate, most of Afghanistan is deforested due to centuries of poor farming and overgrazing. According to the reassurance of HPI, their ecological footprint is very low by global standards, but they are not sustainable development at all.

In addition, HPI has is difficult to calculate for many countries due the missing data which used to build up in the procedure. The main source for the Life Satisfaction only including for 70 countries, it has been necessary to estimate for about 100 other countries (Campus, 2010).

Conclusion

Admittedly, HDI contains some key factors to measure the development, especially estimating the economic living standard. However, according to the framework for the progress of societies discussed above, we can see HDI neglects all the factors of Ecosystem Condition. In contrast, HPI is an effective measure which does not reflect the same reality the HDI illustrates. Instead, it provides majority important factors that shouldn’t be ignored when analyzing well-being in both human system and ecosystem, such as social networks, relationship status and psychological state. The more important factors HPI contains are measuring the ecological demands of human activities. From the Happy Planet Index 2.0 (2009), we can see the HPI has three targets, which are promoting longer healthier lives, fulfilled and satisfied lives and reducing resource consumption.

In all, although HPI is imperfect, it is more suitable than HDI to measure the development of social recently. The UNDP should replace the Human Development Index with the Happy Planet Index, which is more suitable for promoting sustainable development and raising human well-being.

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