Thursday, July 24, 2014

New measures, new insights: the 2014 Human Development Report | Development Progress

By Stephan Klasen, Development Progress

Stephan Klasen takes a look at what's new in the 2014 Human Development Report and notes the main themes of falling global inequality in human development, a new gender measure and high but falling levels of multidimensional poverty.

UNDP has published its new Human Development Report today, with its usual suite of human development indicators that are widely used to assess progress and rank countries. But this year it also introduces one new measure, the Gender Development Index (GDI), presents trends in multidimensional poverty (via the MPI), and makes some slight amendments to its existing indices.

Falling global inequality in human development

While there has been little alteration in the flagship Human Development Index (HDI), which combines life expectancy, education, and per-capita income, two sensible changes have been introduced (reversing revisions made in 2010). First, to ensure comparability of HDI values over time, the ranges for achievable values for the different dimensions have been fixed, as have the cut-off points for the categories of low, medium, high, and very high human-development countries. This ensures that countries that improve their HDI can actually 'graduate' to a higher human development category.

More dramatic are the changes brought about by using the recently published comparable per-capita income figures, using the 2011 International Comparison of Prices results. These data, based on the most comprehensive and comparable assessment of income and prices across the world, found that many developing countries are much richer than previously believed. As a result, the HDI for many developing countries jumps upwards: South Asia as a group moves from low to medium human development, and China jumps by 10 ranks (compared to its position using the old GDP figures) and now belongs to the group of high human-development countries. As a result, the world looks a much more equal place in human development terms, driven by much lower global income inequality.

A sensible new gender measure with surprising results

UNDP has experimented with measures to capture gender gaps for the past 20 years. In 2010 the Gender Inequality Index (GII) was introduced to measure the human development costs of inequality and consider gender gaps in health, empowerment, and the labour market. The construction of the index is highly complex, very hard to interpret, and nearly impossible to communicate in any detail to policy makers. For now, it has been retained. But UNDP has added a new measure, the Gender Development Index (confusingly using the same acronym as the old Gender-Related Development Index abandoned in 2010, which was a totally different measure).

The GDI is simple and sensible. It calculates the HDI for females and males, and the GDI is simply the ratio of the two. It turns out that there are a number of countries (16 in all) where the female HDI is actually higher than the male HDI, including a number of countries in Eastern Europe and Central Asia. In these countries, women outlive men by more than five years and/or have more education than men, while earning incomes that are only slightly lower than those of men. The new GDI reflects a reality of narrowing gender gaps across the world and, in some parts of the world, of women overtaking men in several dimensions of human development. While much of this has to be seen as real progress, high GDI values can also stem from the poor human development performance of men. It may be no surprise that some of the transition countries of Eastern Europe and Central Asia rank highly in the GDI, given that men in these countries have life expectancy that is 8-10 years shorter than for women, often linked to poor health habits, alcoholism and associated accidents and violence.

Interestingly, UNDP has adopted a new approach to ranking for the GDI. It is not the country with the highest GDI value that gets the top ranking (that would be Estonia), but the country closest to perfect equality (a value of 1), which is Slovakia.

At the bottom end of the scale, countries such as Afghanistan, Niger, Yemen, and Pakistan have the largest gaps in all dimensions of human development between males and females – 30-40% on average.

High but falling levels of multidimensional poverty

UNDP has published the Multidimensional Poverty Index (MPI) since 2010, which calculates the number and share of households suffering from severe multidimensional deprivations, including health, education, and access to basic services. This year, UNDP has amended the MPI to iron out some problems in earlier versions and has started to calculate trends in multidimensional poverty. It has also promised to put all files that document the detailed calculation of the MPI on its website for the first time, which will dramatically increase transparency around this measure.

On the substance of the measure, there is good and bad news. The bad news is that nearly 1.5 billion people still suffer from acute multidimensional poverty – more than the roughly 1.2 billion living in income poverty of less than a $1.25 a day. And this is just in the 91 developing countries included in the assessment; it may be that close to 2 billion people suffer from this form of deprivation. The good news is that in nearly all countries where time trends are available, multidimensional poverty is on the decline. Rwanda is the star performer here, reducing the share of people in multidimensional poverty from 87% to 71% in just five years.

In short, the numbers in this year's Human Development Report provide a mixed picture of the state of human development: inequality in human development between countries is falling, gender gaps differ greatly by region, and multidimensional poverty is huge, but falling. Clearly, there is still plenty of work to do as the world gears up to settle on the post-2015 agenda.

New measures, new insights: the 2014 Human Development Report | Development Progress