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.