Human Development Index: Methodology for Aggregation Revisited

Abstract

Since 1990, the United Nations Development Programs (UNDP) have presented the Human Development Index (HDI) with different technical applications. Latest by 2010, it undertook comprehensive reviews of all critiques so far available and introduced several major changes. The revolutionary change, in our view, was to introduce the application of geometric mean (GM) in place of arithmetic mean (AM) as the aggregation technique of all dimension indices to form the composite HDI. This article is an attempt to raise some questions, both theoretical and empirical, regarding that particular change in aggregation technique. Following a theoretical discussion on the rationale of ‘Arithmetic Mean’ vis-à-vis ‘Geometric Mean’, this article suggests that, for the construction of HDI, application of GM is not that suitable because of not only the complex and varied nature of its (i.e., HDIs) underlying dimension indices but also those of their comprising individual indicators. On the basis of available UNDP data, an analysis is offered here for the years 2010, 2015 and 2020. Going through this analysis, we may conclude that, at least in the present context, application of AM as the aggregation technique may not be fully perfect, but the application of GM leads us to a situation of more imperfection.