Why Hong Kong, Japan and Iceland are the best countries for human development

Since its introduction in 1990, UN’s Human Development Index (HDI) has contributed to shifting our understanding of development away from a purely economic view, toward a more diverse one, combining data on health, schooling and economics. HDI, though, has its flaws, according to a new study co-authored by Simone Ghislandi, an Associate Professor at Bocconi University’s Department of Social and Political Sciences, and it could be conveniently replaced with a new and simpler Human Life Indicator (HLI).

The new index takes into account only the inequality-adjusted life expectancy at birth: at life expectancy parity, i.e., a country with many disadvantaged people dying young and many rich people dying old is considered worse-off than a country with all the population living about the same age. Even if the two indexes are highly correlated (0.93), HLI also measures the progress toward reducing inequality in human development.

&laquoReplacing a set of indicators with a single one makes sense because the components of the HDI are correlated and picking one doesn’t imply a major loss of information», prof. Ghislandi says. Furthermore, life expectancy is the right choice because it’s the most reliable among HDI’s components. Finally, HDI implicitly assumes that life has a different value in different countries. &laquoAs the same HDI score can be reached with different combinations of life expectancy and GDP per capita, tinkering with data you can observe different economic values for one year of life in different countries», Prof. Ghislandi continues.

The new indicator produces an earthquake in the development ranking, with significant loss of positions, compared to HDI 2018 revision, for rich but unequal countries (the US drops from 13th to 32nd, Australia from 3rd to 10th, and Germany from 5th to 25th) and gains from more equal ones (Japan jumps from 19th to 2nd, Spain from 26th to 5th, and Italy from 28th to 6th).

UN’s HDI HLI

Norway 1 Hong Kong

Switzerland 2 Japan

Australia 3 Iceland

Ireland 4 Singapore

Germany 5 Spain

Iceland 6 Italy

Hong Kong 7 Switzerland

Sweden 8 Sweden

Singapore 9 Norway

Netherlands 10 Australia

Denmark 11 Israel

Canada 12 France

United States 13 Netherlands

United Kingdom 14 Korea

Finland 15 Luxembourg

New Zealand 16 Finland

Belgium 17 Canada

Liechtenstein. 18 Austria

Japan 19 Ireland

Austria 20 Slovenia

Luxembourg 21 New Zealand

Israel 22 United Kingdom

Korea 23 Portugal

France 24 Greece

Slovenia 25 Germany

Spain 26 Belgium

Czechia 27 Denmark

Italy 28 Malta

Malta 29 Cyprus

Estonia 30 Czechia

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Simone Ghislandi, Warren Sanderson, Sergei Scherbov, A Simple Measure of Human Development: The Human Life Indicator, in Population and Development Review, 6 November 2018, DOI:10.1111/padr.12205.