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The Meaning of Poverty - page 6 / 35

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With the Human Development Report 1990, the UN Development Program (UNDP) introduced the Human Development Index (HDI) along with the rationale behind the index.  Part of the rationale was that:

“… people often value achievements that do not show up at all, or not immediately, in higher measured income or growth figures: better nutrition and health services, greater access to knowledge, more secure livelihoods, better working conditions, security against crime and physical violence, satisfying leisure hours, and a sense of participating in the economic, cultural and political life of their communities.  Of course people also want higher incomes as one of their options.  But income is not the sum of human life.” (UNDP, 1990, p. 9)8

The authors of the Report went on to explain the HDI, a partial measure of this broader standard of material well-being – broader as compared to the traditional income measure.  The HDI is partial in that it is an index based on only three considerations: income, health, and schooling/literacy.9  The index is based on only three components in part because of the data limitations; the security of livelihoods, working conditions, and other important factors mentioned in the quotation above are hard to measure, and finding comparable international data would be a veritable impossibility.  Also, while the meaning of an index of three items is hard enough to justify (if it can be justified at all), an index of many more variables would completely lose meaning.  (A brief description of the details of the construction of the HDI is provided in Appendix A.)   

The emergence of the HDI as a measure of countries’ well-being or lack of well-being was a major and favorable development.  It was a generally respected and generally accepted step towards providing a more realistic measure of people’s material situation, and it both represented and advanced a wide dissatisfaction with the traditional

8 Interestingly, in this chapter of the Report, where the rationale for approaching economic change in terms of “human development” is set out, the argument is justified by reference to a series of European philosophers, from Aristotle through, among others, Kant, Lavoisier, Smith, Marx, Mathus, and Mill.  Reference to non-European authority is nowhere to be found.

9 I use the term schooling/literacy rather than education or knowledge – the terms more commonly used to describe these issues – because I think this is a more accurate description of what is included in constructing the HDI.  This component of the HDI is a measure of enrollment rates and literacy rates, not education or knowledge, which are much broader concepts.  Indeed, there is a widespread confusion over this issue in development economics, as what people usually mean by “education” is in fact “schooling” – that is, a particular kind of education that imparts a particular kind of knowledge.  To confuse the two is to imply that people who do not have formal schooling are without education and knowledge, a grossly misleading idea.

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