Thursday, January 22, 2009

How HDI Relates to GDP

There is a cool interactive graphic from UNDP for comparing HDI and GDP.

Click here to give it a shot.

What does it mean when a nation's HDI rank > GDP rank?
What does it mean when a nation's HDI rank < GDP rank?

If you had to choose, where would you rather live, in a nation with a high HDI or a high per capita GDP?


  1. HDI rank > GDP rank suggests that a country is using its wealth more effectively to improve the lives of its people.

    HDI rank < GDP rank suggests that a country is using its wealth less effectively to improve the lives of its people.

    Of course, this assumes that HDI is an accurate measure of quality of life...

    Since GDP per capita is used in calculating HDI, there are not many countries with high HDI and low GDP (or vice versa)

    Only a few countries categorized as "High Human Development" are not categorized as "High Income" by GDP. The highest ranking country by HDI with a GDP per capita < $11,455 is #46 Uruguay.

    Albania and Cuba are the only 2 "High Human Development" countries that have a GDP per capita < $6,000.

    (All based on 2007 data from

    I think I'd probably only consider living in a country with both high HDI and high GDP. I guess I'm kind of high maintenance...

  2. Good stuff. Let's take it from a hypothetical decision for an individual to an examination of real decisions made by society...

    Obviously, you can't choose where you're born. But, some people do get to choose whether or not to move to another country.

    Suppose we wanted to design an empirical study addressing the following questions:

    When faced with migration decisions, what factors influence people's choices?

    Are these factors related to incomes or non-monetary measures of well-being?

    Which factors are the most important?

    What data would we have to collect?
    How might we use that data to examine the above questions?

  3. I think peoples motivations for moving would correlate with their ages and income to significant degrees. However, these are some things that I feel the vast majority would keep in mind:

    Job availability (I think this is one of the largest factors unless you are wealthy enough to not work.)

    Crime/War (Probably wouldn't want to move somewhere where your chances of dying increase dramatically)

    Power of currency (ex: I would not move to England because converting US dollars to pounds would result in me losing around half of my money.)

    Experiences of third parties (friends or other influential people who have visited or lived where you are thinking about moving)

    Your connections in foreign countries (If you know people in a country it might create a bias towards/against that country)

    Perspectives of native culture to your culture (If you feel you would face prejudice in a country, you probably don't want to live there)

    Type of government

    Laws of country

    Recreational activities available

  4. A place with a high national income : HDI would be way better. This means you have more money to buy whatever you want thats missing from your HDI like a trip to the hospital... or atleast there is somebody around who can buy it for you like the village benefactor.

    *notice Cuba is not listed

  5. When HDI is greater than GDP it reveals how development has taken the place of excess income, which no longer necessarily needs to be high, for opportunities of health and education are available to a larger extent to the nation as a whole. This can provide the nation with the development needed for the optimal growth, which would allow development to be sustained as growth continues.

    When GDP is greater than HDI it reveals how production has taken the place of developing the population to the degree in which now fewer people have the access to education and health because the money is invested possibly back into the economy for growth to achieve some other objective than to increase the overall welfare of the public.

    I would rather live in a nation with a high HDI, because with a highly developed nation, money is no longer the means by which things are valued. As a more developed nation, I would think that the more educated and healthy everyone was they would make wiser decisions that would start to include the marginal costs of their actions and do things the right way instead of producing to the extent in which more harm is done, i.e. to the environment, the health of the nation, the inability for the people to get an education to rise above the constraints set forth by an systematic structure whose primary goal is to have people function as a machine rather than living with the power to choose.

  6. Would you consider starting a Facebook page to post updates on these issues? I was thinking of a title something like: "Is GDP outdated as the sole indicator of a nation's well-being?"

  7. Developed countries=high HDI and high GDP?
    Developing countries=low HDI and high/low GDP?