Human Development Index: What it means and how to measure it.

Although GDP, GNI and per capita income are the key indicators in macroeconomics A country, but all three, do not set overall economic goals, including the welfare of its citizens. Simply put, a high per capita income does not mean that the people of that country will be wealthy. because welfare is not measured in money only

to overcome this Economists have developed a new indicator known as the Human Development Index (IPM), or human development index (HDI). What is the HDI Index and how does it measure the welfare of the people of a country? Check out the comments below:

What is the Human Development Index?

The Human Development Index is an indicator that economists use to measure the socio-economic development of a country. Human development indicators consist of three components: education level, life expectancy and per capita income.

The assumption is that people will live wealthy if they have access to higher education. access to health and a good quality of life so that they can live longer and earn enough This indicator was first used in the 1990s by the United Nations Development Program (UNDP) to supplement standard economic indicators. such as GDP and GNI

The existence of the Human Development Index is useful in evaluating a country’s economic development and helps each country develop appropriate economic policies. For example, two countries have the same per capita income, but Country A has a higher HDI than Country B. Therefore, In general, it can be said that country B’s economic policy has no direct impact on the socio-economic development of its country.

Human Development Index Indicators

As mentioned above, there are three components used to calculate HDI: education, health (in this case, life expectancy) and an affordable standard of living. (income per capita), each component is represented by a different matrix, namely:

1. study: Educational components are calculated from the average educational years of the population in the area. and the number of academic years that children in the area can expect when they start school. The assumption is that low-middle-income countries or poor countries are unable to comprehensively build their own schools. Therefore, children in these countries tend to drop out of school quickly or even lose access to higher education.
2. health (life expectancy): Life expectancy is a statistical indicator that measures the average life expectancy of a person. The assumption is when individuals have better access to literature and health facilities In this case, life expectancy is counted as 0 when life expectancy is 25, and 1 if life expectancy is 85.
3. per capita income: per capita income It is used as an economic indicator to describe a person’s standard of living. to address income inequality between regions or countries The departments involved generally use adjusted per capita income. purchasing power parity (M.P.P.).

The total score of the above 3 elements will be recalculated to get 0-1. The closer it gets to 1st place, the better the development of people in that country. A country or region is said to have a very high HDI score, if a score above 0.8 is high, if it’s around 0.7-0.8 it’s moderate, if it’s 0.6-0.7 it’s low, if it’s below HDI, it’s low. over 0.6

Benefits of the Human Development Index

speak broadly The benefit of HDI calculations is to find out what the socioeconomic conditions are in the area. And how will local government policies affect human resource development in the area?

For example, knowing that a province’s HDI score is low Local governments can focus on economic development in the education and health sectors. This can be done by improving the infrastructure of schools, health centers and hospitals, as well as supporting infrastructure to make it easily accessible to the local community.

The Human Development Index is also an indicator of the success of regional governments. This indicator is included in the Regional Medium-Term Development Plan (RPJMD) of each province and district.

How to measure the Human Development Index

The HDI calculation formula is continually updated by the UNDP to reflect the latest economic developments. Here is the formula for calculating this indicator used after 2010:

for each component is calculated by the following formula:

health:

information:

AHH = life expectancy. Minimum life expectancy (AHH min) is 25 years while maximum life expectancy (AHH max) is 85 years.

study

information:

H.L. = Old School Hope

SRT = average length of school

PPP income per capita

Per capita income, or GDP per capita, is generally calculated using the expenditure method. GDP per capita is referred to as minimum if it is 100 and maximum if it is 75,000. The natural logarithm, or ln, is the mathematical component used to adjust. income to match purchasing power parity.

Indonesia Human Development Index

According to UNDP, the current average human development index The world’s average is 0.73, with a life expectancy of 71.4 years, an average schooling of 8.6 years, and an average global per capita income of $16,750 per year. The HDI was the highest with a score of 0.96 and South Sudan was the region with the lowest HDI.

According to these data, Indonesia’s HDI score was also below the world average by a score of 0.705, detailing life expectancy of 67.6 years, school and schooling expectations respectively of 13.7 and 8.6 years, and a per capita income of $11,466 per year. that the average age of Indonesians is 67 years, while the average Indonesian is still in junior high school 2 (8 years).

Meanwhile, according to information from Central Statistical OfficeThe value of Indonesia’s Human Development Index in 2022 will reach 72.9. DKI Jakarta and DI Yogyakarta scored the highest HDI scores of 81.6 and 80.6 respectively, while the province of Papua scored the lowest at 61.39.

Looking at each component, BPS indicates that the life expectancy of infants in Indonesia is as high as 71.85 years, school life expectancy is 13.08 years, and the average school is 8.6 years. past

These data are collected by BPS through various data collection methods such as the 2010 Census, the National Socio-Economic Survey (SUSENAS) or the 2010-2035 Indonesian Population Estimates. Home to elaborate inquiries like this.

Data discrepancies between BPS and UNDP may occur due to different methods of collecting and calculating data. For example, BPS still has literacy rates (literacy rate) in the HDI calculation method.

Limitations of the Human Development Index

Although such ideas are good and revolutionary. But it is undeniable that the above HDI formula is still very simple and does not include other social factors. These social factors, such as freedom of expression, scope of employment poverty indicator to gender equality

Why is this social factor important? Simply put, people in a country have a better and increasing standard of living. But there is no freedom to express opinions to criticize the government. Or women in that country are not free to get education and jobs. So on.