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Human Development Index

The Human Development Index (HDI) is a composite index that ranks countries based on four key indicators (3 dimensions):

  • Life expectancy in years (health)
  • Expected years of schooling (education)
  • Mean years of schooling (education)
  • Gross national income per capita (standard of living)

Equal weighting (1/3) is given to each of the above dimensions: (1) health, (2) education, and (3) standard of living.

And the resulting index value is a normalized number between 0 and 1, with the latter number representing the maximum possible value.

Generally speaking, a country is thought to be developed or advanced when it has an HDI greater than 0.8.

The way you calculate each dimension’s index value is by using the minimum and maximum limits set out by the United Nations.

To give you an example, for gross national income per capita (standard of living), the minimum is $100 and the maximum is $75,000. (Logic behind these numbers, here.)

Once you know the boundaries, you then use this formula for each dimension:

Dimension Index = (Actual Value – Minimum Value) / (Maximum Value – Minimum Value)

Each of the individual dimension indices are then aggregated together to create that country’s HDI.

In 2017, the country with the highest HDI was Norway at 0.953. Brazil, which is what got me started thinking about this, was at 0.759. So not quite developed.

Canada and the US were on top of each other at 0.926 and 0.924, respectively.

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