This document provides instructions for calculating the Human Development Index (HDI), which is a metric developed by the UN to assess countries' development based on people's capabilities rather than just economic growth. The HDI is the geometric mean of three component indexes: 1) Living Standards based on GNI per capita, 2) Health based on Life Expectancy, and 3) Education based on Expected Years of Schooling and Mean Years of Schooling. Each component index is calculated by taking the log of a country's measure relative to the minimum and maximum observed internationally. The document then provides data to calculate the HDI for Nepal and the US based on these instructions.

1. Development Index: In-Class Worksheet
ECNS 317
INSTRUCTOR
1 Calculating the Human Development Index (HDI)
The HDI was developed by the UN Development Programme in order to emphasize that people and their
capabilities should be the ultimate criteria for assessing the development of a country, not economic growth
alone. It is the geometric mean of 3 other indexes:
1. I(GNIi) – Living Standards (GNI)a
2. I(LEi) – Health (Life expectancy)
3. I(Ei) – Education – the geometric mean
of:
(a) I(EY SCi) – Expected years of
schoolingb
(b) I(MY SCi) – Mean years of schooling
a
Gross National Income (GNIi) is PPP-adjusted.
b
Number of years of schooling that a child of
school entrance age can expect to receive if prevail-
ing patterns of age-specific enrollment rates persist
throughout life disaggregated by sex.
How to Calculate These Indexes:
Each index, I(xi), is constructed for
country i:
I(xi) =
ln(xi) − ln(xmin)
ln(xmax) − ln(xmin)
xi − measure from country i
xmin − min. measure observed int’ly
xmax − max. measure observed int’ly
How To Calculate the HDI – An index of indexes using geometric means.
Education Index:
I(Ei) = I(EY SCi) × I(MY SAi)
Human Development Index:
HDIi = 3
I(GNIi) × I(LEi) × I(Ei)
Where
EY SCi : Expected Years of School Completion
MY SAi : Mean Years of School Attainment
GNIi : Natural log of Gross National Income
LEi : Life Expectancy
Economic Development, INSTRUCTOR

2. 2 Let’s Practice!
Use the following minimum and maximum values observed internationally as well as the values for Nepal
and the U.S. to calculate your indexes, I(xi).
Life Expected Years Mean Years GNI per Capita
Expectancy of Schooling of Schooling (PPP-adjusted)
Minimum 20 0 0 163
Maximum 83.2 20.6 13.2 108,211
Nepal 69.1 8.9 3.2 1,137
United States 78.7 16.8 13.3 43,480
Nepal
ranked 145th out of 186 for HDI in 2013
I(GNINepal) =
I(LENepal) =
I(ENepal) =
HDINepal =
United States
ranked 5th out of 186 for HDI in 2013
I(GNIU.S.) =
I(LEU.S.) =
I(EU.S.) =
HDIU.S. =
Economic Development, INSTRUCTOR