Human development: Measuring wealth or well being?
What should we measure when comparing communities or nations with each other?
†It is easy enough to say that Sweden is different from Sri Lanka or that Canada is more prosperous than Cambodia. But how do we compare, say, Kuwait and Korea? By GDP i.e. the total national income and per capita income? Man does not live by bread alone, as the clichť goes. What about education, health, technology, equality, not to speak of even more intangible attributes?
Such questions led to thinking about a new measure -- the Human Development Index (HDI). A few months ago, the 20th Human Development Report (HDR) was released. Behind its conceptual development and eventual acceptance lies a story of not only innovative thinking but also an extraordinary intellectual collaboration between two thought-giants from Pakistan and India -- Mahbub-ul-Haq and Amartya Sen. Today, it is worth recalling how a new thought evolved and came to be recognised as a result of the brilliance of these two and, of course, some other development economists.
Economic orthodoxy traditionally is focused on numbers: Gross domestic product, savings and investment rates in a country, the rate of economic growth and that vital figure, the per capita income. All this was no doubt important, but Haq, a thinking international economist from Pakistan had a nagging doubt. As he told his life long friend Sen, if Pakistan grew at a high rate for 40 years, it could possibly match Egypt in terms of per capita income. Is that all that they should aim at? What about the quality of life, of choices and opportunities for people, of satisfaction at homes even if incomes were low? Incomes are important and are the answer to many problems, especially for the poor such as food, some form of housing and meeting other basic necessities. But could they think of another index to measure the well-being and not wealth alone, which was more people-centric? Sen† was sensitive to the argument, but was sceptical about finding a single number to capture the state of a community’s well being. As he has since reminiscenced, he told his old friend that it would be too 'vulgar' to try to capture such complexity in one number, but Haq insisted that this was precisely what was required, a 'vulgar number' which would capture the public imagination and media attention, in the way of the classical per capita GDP.†
What the team of economists under the umbrella of the UN gradually have tried is to capture a complex reality in a number. They could not and hence did not focus on nebulous and immeasurable concepts like happiness or contentment or similar quasi psychological states of mind. On the other hand, it had to be something quantitative. What helps human development apart from material goods or income? There can be no doubt that health, nutrition, education, longevity, and at a different order social, categories such as class or gender equality are factors which enhance human capacity. ‘Capabilities and not only commodities’ differentiates the approach of HDI as distinct form GDP, in Sen’s words.
Today, the HDR has evolved as a sophisticated and rigorous undertaking. The reports every year are like a mini scorecard to what is happening in a community, in a region and in a nation. At one level, one can compare a country's progress or decline over a period of time, say, India in 2010 as compared to 2000, not only in terms of† per capita income, but other requirements for the well being of people. At another level one can indulge in international comparisons and see a country or a region and how it fares in comparison to another. Human nature being what it is, we all want to know which country has done best, who is at the bottom and where your own country stands. Economists are wary of such rankings as the countries that lose their rankings or have done ‘worse’ question the methodology, but it is this ‘vulgar’ aspect of a single number and a rank that Haq knew would give HDI some visibility and publicity. And so it is.
What are some of the interesting insights from the latest report? The best country in the world? Norway, with $58,000 per capita income, 81 years’ life expectancy, 13 years of average education for each individual. Some of the other high ranking countries? No surprises there. All the Scandinavian countries, New Zealand, Canada etc. Qatar has a per capita income of nearly $80,000, one of the highest in the world, but is today at number 38 in the rankings, quite high but still lower on HDI compared to much of Europe, thus demonstrating that factors apart from wealth influence this index. The countries at the bottom. Not surprising again: Zimbabwe, Congo, Niger.
But what about India? We know intuitively that the number cannot be very good with our deficiencies in education, public health and nutrition apart from low per capita income. We are at position 119 among 169 nations and the only good news is that we moved up one rank compared to last year. China is at 89 gaining eight places with its strides, and Pakistan is at 125, having dropped two places. The best in our region is Sri Lanka.
But the UN report like human development itself is always work in progress. New aspects are being explored on a continuing basis to add to the diversity of the package of measures, to capture aspects of societies. We cannot expect to improve our rankings in a hurry, but at the same time, should we not take some satisfaction that we have contributed to the intellectual process culminating in this rich and meaningful measure?
(The writer is India’s Ambassador to Brazil)