Human Development Index: History, Construction, and Possible Correction to Make It a Good Policy Index

Abstract

Human Development Index (HDI), since its introduction in 1990, has been used to investigate the "capabilities" as a way to understand the well-being of people as per Amartya Sens's Approach (Stanton, 2007) emphasizing the importance of ends over means (Sen, 1985). Through the essay, the history and the evolution of the HDI, as well as its modification, will be analyzed: UNDP built this tool as "evolving and improving rather than as something cast in stone. It is also an exercise in which as many of its users as possible should actively participate." (UNDP, 1993: 104). A particular focus will be on the GDP per capita index, its modifications, critiques, and ratio to understand whether it can now tackle the task it was aimed too or if further evolution might be required. Moreover, a general and deeper analysis of other critiques and modification proposals to the index will be assessed. Once state of the art on the topic is studied, the chance to weigh GDP per capita with every country's subsistence cost of living will be investigated. This idea is to avoid critics of HDI, such as redundancy and the fact that some scholars mocked HDI due to its incapability to draw attention away from GDP and towards a broader concept of human development (Stanton, 2007). Moreover, in a world where the poverty threshold in "developed countries" has been lowering, inequalities are rising, and cyclical inflation phenomena are displaying effects, is GDP per capita still an excellent parameter to be considered per se? To achieve such an ambitious goal, it will be essential to decide which parameters to consider: "Food prices" or just some more basic virtual goods such as "Fruit and Vegetable prices," leaving aside "Milk, cheese, eggs and Meat prices"; "Housing and utilities prices" over "Furniture and household maintenance prices", similarly "Transport prices" instead "Vehicle prices". Other things that may influence the actual weight of per capita income and that shall be considered if included are: Cost of living, Bread and cereal, Fish and seafood, Clothing, Healthcare, Communication, Recreation and culture, and Education,... This is because considering in the index just the income not needed for subsistence would mean considering just the income available for personal realization and aspirations.