Understanding Key Development Indicators: HDI, MPI, GPI & More

Understanding Key Development Indicators

HDI (Human Development Index)

The Human Development Index (HDI) is a summary measure of average achievement in key dimensions of human development: a long and healthy life, being knowledgeable, and having a decent standard of living. It was created to emphasize that people and their capabilities should be the ultimate criteria for assessing a country's development, not economic growth alone.

MPI (Multidimensional Poverty Index)

The Multidimensional Poverty Index (MPI) is a summary measure of average achievement in key dimensions of human development: health, education, and a decent standard of living. This index replaced HDI in some contexts. It is used instead of Gross National Income (GNI) because GNI does not reflect individual circumstances.

GPI (Genuine Progress Indicator)

The Genuine Progress Indicator (GPI) measures sustainable economic welfare, rather than economic activity alone. It aims to capture a country's wellbeing by incorporating environmental and social elements not found in the calculation of Gross Domestic Product (GDP). Its three core principles are:

• Consider consumption, but adjust for inequality.
• Include non-market benefits (not counted in GDP).
• Deduct environmental degradation, human health effects, and loss of leisure time.

Social Progress Index

The Social Progress Index measures a society's capability to meet the basic human needs of its citizens, establish the building blocks that allow citizens and communities to enhance and sustain their quality of life, and create the conditions for all individuals to reach their full potential.

Inclusive Wealth Index

The Inclusive Wealth Index measures a nation’s capacity to create and maintain human well-being over time. It measures wealth using a country’s manufactured, human, social, and natural capital. It is intended to help countries assess whether they are developing in a way that allows future generations to meet their own needs.

Lorenz Curve

The Lorenz Curve is a graphical representation of how income is cumulatively distributed among members of a population. The further the Lorenz curve bows away from the line of perfect income equality, the more unequal the distribution of income.

Gini Coefficient

The Gini Coefficient is a numerical measure of income inequality. It is derived from the Lorenz Curve. The area between the Lorenz curve and the perfect-equality line indicates the degree of income inequality. A Gini coefficient of 0 represents perfect equality, while a coefficient of 1 represents maximum inequality.