Loading the player...

What is the 'Human Development Index - HDI'


BREAKING DOWN 'Human Development Index - HDI'


How is the HDI Measured?

The HDI is essentially a summary measurement of basic achievement levels in fundamental dimensions of human development. The computed HDI of a country is a geometric mean of normalized indexes of each of the life aspects that are examined – knowledge and understanding, a long and healthy life, and an acceptable standard of living.

The health aspect of the HDI is measured by the life expectancy, as calculated at time of birth, in each country. Education is measured on two levels: the mean years of schooling for residents of a country and the expected years of schooling that a child has at the average age for starting school. The metric chosen to represent standard of living is GNI per capita based on purchasing power parity (PPP), a common metric used to reflect average income.


The HDI is a simplification and an admittedly limited evaluation of human development. The HDI does not specifically reflect quality of life factors, such as empowerment movements or overall feelings of security. In recognition of these facts, the Human Development Report Office (HDRO) provides additional composite indices to evaluate other life aspects, including inequality issues such as gender disparity or racial inequality. Examination and evaluation of a country's HDI is best done in concert with examining these and other factors, such as the country's rate of economic growth, expansion of employment opportunities and the success of initiatives undertaken to improve the overall quality of life within a country.

  1. Adjustment Index

    An adjustment index is a formula or numerical value that is used ...
  2. Third World

    Third World is a phrase commonly used to describe economically ...
  3. Per Capita GDP

    Per capita GDP is the measure of a country's output that shows ...
  4. National Income Accounting

    National income accounting refers to the bookkeeping system that ...
  5. Net Debt Per Capita

    The net debt per capita is a measurement of the value of a government's ...
  6. Economics

Related Articles
  1. Insights

    Could Third World Debt Relief Pay Off?

  2. Insights

    The World Bank's All-Important World Development Indicators (WDI)

    The World Development Indicators are the world's economic scorecards: they evaluate where nearly every country stands and how far it has yet to go.
  3. Investing

    As Hedge Funds Automate, Some Managers Prefer Human Analysts

  4. Investing

    3 Emerging Markets With Bright Prospects

  5. Insights

    Deadly Flaws in Major Market Indicators

  6. Retirement

    10 Best Countries for New Retirees

    Natixis Global Asset Management recently released its 2015 Global Retirement Index, and you may or may not be surprised that the U.S. barely cracked the top 20 at number 19. Of the top 10, eight ...
  7. Financial Advisor

    Don't Ignore the Importance of Human Capital

  8. Insights

    The Wealth Gap: Developing Nations Are Catching Up

    The difference between rich, developed nations and poor, developing nations is shrinking. Find out what this means for you.
  9. Small Business

    The Value Of A "Useless" Degree

    Think a humanities degree will leave you penniless? Think again.
  10. Insights

    The Correlation Between Education And The Economy

    Is there a correlation between education level and a state's economic output?

    Discover why gross national income may be a better metric of an economy than gross domestic product when an economy has substantial ... Read Answer >>

  3. How do firms improve their employees' human capital?

  4. What impact does industrialization have on wages?

Trading Center