Life in developing countries continues to improve

SHORTLY before he was assassinated during a presidential-election campaign, Robert Kennedy famously said that GDP—economists’ favoured measure of prosperity and progress—captured everything “except that which makes life worthwhile”. In 1990, recognising these shortcomings, the United Nations Development Programme (UNDP) created a Human Development Index (HDI), a new metric that attempted to capture changes in developing countries’ quality of living.

The index combines four simple measures: life-expectancy at birth; gross national income per person; average years of education; and expected years of school. First, each variable is normalised on a scale of zero to one; next, the two education variables are averaged; and finally, the index is calculated as the geometric mean of its three components. This ensures that a 1% decline in the index for life-expectancy has the same impact as a decline of the same magnitude in education. By incorporating health and schooling, the HDI seeks to provide a more comprehensive measure of quality of life than the simply material prosperity measured by GDP.

Now in its 28th year, the HDI provides a handy summary of the progress achieved in developing countries around the world. In 1990 a child born in sub-Saharan Africa could expect to live just 50 years. Today, assuming current mortality trends persist, newborns can expect to live for 61 years. As a result, the gap in life-expectancy between the world’s poorest region and the global average has narrowed by four years. Similar gains have been registered in educational outcomes and income, meaning that all 189 countries with HDI scores have improved their marks since 1990, by an average of 0.5% a year. Just seven countries have seen a reduction in their HDI score since 2010, often as a result of war or famine.

Encouragingly, the HDI data demonstrate that inequality of life outcomes is declining both across and within countries. As developing countries have closed the gap with their developed-country peers, the coefficient of variation—a measure of the spread of the data across countries—of the HDI has fallen by six percentage points since 1990. Because the “raw” HDI is based on nationwide averages, it can provide a misleading picture of overall living standards in highly unequal countries, where a handful of people enjoy long, wealthy lives and advanced schooling, but the masses do not. However, the UNDP also publishes an “inequality-adjusted” version of the HDI, which attempts to account for the distribution of health, education and prosperity. The gap between this metric and the unadjusted HDI was slightly smaller in 2017 than it was the year before, suggesting that well-being is being shared more broadly inside countries as well as between them.