An Axiomatization of the Human Development Index

Abstract

In 2010 the UNDP unveiled a new methodology for the calculation of the Human Development Index (HDI). In this paper I investigate the normative and practical properties of this change vis a vis the original formulation of the HDI in 1990. The main conceptual innovation of the new index can be summarized as follows: the new HDI penalizes both low and uneven achievements across all dimensions of human development, whereas the old formulation is not sensitive to such uneven development. In practice, however, both methodologies agree considerably in terms of how they rank countries, but when they differ, the new methodology produces results more consistent with what the HDI is intended to measure: human development and capabilities, as conceptualized by Sen (1985).