New U.N. Report Reveals a Smarter, Healthier — Yet More Unequal — World

If one were to look merely at bank slips, the world’s countries and people are far less equal today than they were a mere two decades ago. But dig deeper, and the opposite is true: quality of life worldwide is moving toward a rather impressive average. In terms of health, education, and living conditions, the richest and poorest nations are looking more alike. In other words, it’s now possible to be a poor country and boast healthy, educated citizens.

This is perhaps the most important contribution of the United Nations’ Human Development Index (HDI) — a broad measure of global prosperity that has become the gold standard for comparing how countries stack up. On the 20th anniversary of its creation, the new index has been dramatically revamped to provide greater nuance and detail about the state of the world’s people. The good news is that the world is undeniably progressing. The bad news is that the index reveals that the poor — those left furthest behind by that progress — are more numerous than we thought.

When the HDI was first released in 1990, it transformed the way policymakers, journalists, and the public viewed the development of countries around the world. "Rather than focusing on only a few traditional indicators of economic progress," Nobel Prize-winner Amartya Sen, one of the original creators of the index, writes in the introduction, "’human development’ accounting proposed a systematic examination of a wealth of information about how human beings in each society live and what substantive freedoms they enjoy." Relying on economic might alone, for example, one could assume that oil-producing Nigeria is among the wealthiest countries in Africa; its remarkably low human development index, however, puts it well below nominally smaller economies such as Ghana and Cameroon, both of which are dwarfed by Nigeria’s gross output. 

Two decades later, that once groundbreaking methodology was due for an update. "The HDI was radical at the time in providing an alternative to [such gross economic measures as] GDP, but since then, a lot has happened," said Jeni Klugman, director of the index, in an interview. The initial HDI used country-wide averages for indicators like household income, for example, and thus failed to account for vast differences within countries. This was particularly apparent in natural-resource rich countries such as Angola or Equatorial Guinea for example, where the size of the country’s economy — divided by the number of its people — seemed to show that things were going fairly well. But the index failed to account for the consolidation of that wealth in the hands of a small group of people — leaving extensive poverty elsewhere.

Some of the specific indicators had also grown outdated. (The index is based on three primary areas: income, education, and health.) For example, literacy, the primary indicator for education, no longer varies significantly enough between countries to be a useful measure of educational attainment; development experts now consider years spent in school more relevant. Likewise, the index now measures a country’s economy using Gross National Income (GNI) rather than Gross Domestic Product (GDP). The change is technically small but conceptually rather large: while GDP measures all wealth and income produced within a country’s borders, GNI includes income earned by citizens working or living abroad. The advantage is most visible in measuring of remittances, which are counted in GNI but not GDP, and can have a huge impact on a country’s development.

The broad results have not dramatically changed under the new system. The West — and particularly Scandinavia — does particularly well; Norway takes this year’s top honors, while the United States ranks fourth. Familiar faces are also clustered toward the bottom of the index, with Zimbabwe, the Democratic Republic of the Congo (DRC), and Niger filling out the bottom three spots.

More interesting is the middle of the index, where most of the movement has taken place. Over the last 20 years, the countries that have improved most include such well-known success stories as China (up 8 places since 2005), Indonesia (+2), and South Korea (+8). Yet while these countries have risen in large part due to improvements in income, other top performers can credit advances in education and health for their rise. Nepal, for example, has made large strides in primary education. Back in 1970, Oman would have scored similarly to the DRC on the index; the Gulf state had a mere three primary schools in the entire country. But over the following decades, Oman funneled its oil wealth into education infrastructure — paying particular attention to the technical training that its economy demanded. Today, the average Omani lives three decades longer than the average Congolese.

The HDI’s new inequality sub-index adds further nuance to the story. The utility of building the new sub-ranking was to highlight differences in quality of life within a population. In other words, the greater the proportion of people who do not meet basic benchmarks on income, health, and education, the more a country will suffer on the index. For example, the average Brazilian might attend school for seven years — but many do not. Brazil falls from 73rd place to 88th once inequality is considered.

Countries in the West perform well on this basic standard — most citizens complete secondary school, live above a certain age, and have a relatively high base level of income. But in much of the world, this is not yet the case. Eighty percent of all countries lost at least 10 percent of their HDI score when differences across socioeconomic classes were taken into account. Not surprisingly, countries that were lower on the index to begin with suffer an even greater loss: 45 percent in the case of Mozambique, for example. However, high- and middle-income countries also suffer from notable inequality: Argentina, which ranks 46th of 169 countries prior to accounting for inequality, drops to 67th place after taking stratification into account. Brazil, Colombia, Morocco, Peru, and South Africa all lose more than a quarter of their baseline score to inequality as well.

The index also makes useful distinctions between various types of inequality in different countries and regions. While Latin American countries suffer largely from income inequality, for example, South Asian countries are more afflicted by health and education inequality. Sub-Saharan Africa suffers from inequality on all three indicators: income, health, and education.

Gender inequality, now measured in a separate sub-index, shakes up the rankings in other surprising ways. The biggest losers here are Persian Gulf countries, where conservative social norms push down scores on female political representation and access to family planning. Saudi Arabia, which is one of the best overall performers on the index drops to 128th of 169 countries on the gender index. Notably, and despite U.S. and NATO efforts to empower women, Afghanistan loses an incredible 80 percent of its already low score once gender inequality is taken into account.

Finally, the index creates a new and more nuanced measure of poverty — which the United Nations has dubbed "multi-dimensional poverty" — meant to expand our understanding of neediness beyond the World Bank’s widely used poverty benchmark of $1.25 in daily income. The new measure, Klugman explains, takes into account not only income but a whole host of "deprivations" that a household can experience. "The indicators are very austere things, like you had a baby die or you don’t have access to running water."

When this expanded definition of poverty is used, the world has significantly more poor people than previously thought. "If we just look at the $1.25 per day measure, we’re missing a whole lot of people who are suffering these quite serious deprivations in real life," Klugman notes. But the HDI’s finding is not that the number of poor has increased in recent years; it’s simply that the world underestimated their ranks before. Using the new measure, the absolute number of poor people increased from previous estimates in nearly every country — with the notable exceptions of a few countries, including China and Tanzania, where there has been a larger push for basic services in underprivileged communities.

This new index promises to restart the conversation about what matters most in human development. At the country level, the results are often used to pinpoint deprived areas, such as education or healthcare, for intervention. In the international development community, the index can also help direct priorities. The new HDI data is a goldmine of data for eager policymakers; now, they can pinpoint not only broad topical areas for improvement but sub-sectors of the population.

The index can also shed light on the shortcomings of the world’s wealthiest countries. The United States, for instance, rose in the ranking this year from 14th to fourth place. This is a false jump, however, caused by the improved methodology; looking back to 1980 using the new index measures, the United States has actually regressed, falling from first place in 1980 to fourth today. (Though the index was inaugurated in 1990, the United Nations has reverse engineered the rankings back several decades earlier.) The United States performs particularly poorly in gender equality, something that Klugman attributes largely to adolescent pregnancy rates (a measure of family planning services available to women) and poor representation in elected office.

Overall, the new Human Development Index is an affirmation of progress and a call to action for further improvement. "Twenty years after the appearance of the first Human Development Report, there is much to celebrate in what has been achieved," writes Sen in the introduction. "But we also have to be alive to ways of improving the assessment of old adversities and of recognizing — and responding to — new threats that endanger human well-being and freedom."