The dynamics of Human Development Index

• Human Development Index (HDI) is a broader measure of the development level.
• The HDI is composed of per capita GDP, life expectancy, and literacy rate.
• Health/education measures are “stock” in nature, and do not adequately reflect recent policies.
• We propose a revised measure (HDIF) that replaces the stock measures with flow variables.
• The HDIF gives significantly more credit to recent policy accomplishments for low development nations.

In criticizing the nature of the Human Development Index, this paper proposes a different way of constructing the HDI in terms of capturing the pure flow of human development in the areas of material well-being, health, and education. Our comparison of the HDIF and the HDI shows that measuring human development with flow variables provides a better human development performance in terms of health and education than the traditional measure which is a mixture of stock and flow variables.