The Modified Human Development Index (MHDI) and its ...



Measuring and Fostering the Progress of Societies:

A New Approach for CIS and Eastern European Countries

Moscow, 29-30 September 2008

The Modified Human Development Index (MHDI) and its Applicability for Measuring Progress of Societies, the Hungarian Experience

Péter JÓZAN M.D, Ph.D., D.Sc.

Hungarian Central Statistical Office,

Center for Social Studies at the Hungarian Academy of Sciences

The OECD Global Project on Measuring the Progress of Societies builds on the first OECD World Forum on “Statistics, Knowledge and Policy”, held in Palermo in November 2004. Since then, a good deal of work has been done in research. The second OECD World Forum on “Statistics, Knowledge and Policy Measuring and Fostering the Progress of Societies” was held in Istanbul on 27–30 June 2007. On the second Forum, among others, the issues of policy making and democracy, political processes, accountability and civic engagement, people’s perceptions, subjective measures of well-being, challenges for national statistical offices and economic, social and environmental problems were discussed.

The Regional Conference on “Measuring and Fostering the Progress of Societies” to be held in Moscow on 29–30 September will discuss “A New Approach for CIS and Eastern European Countries”.

The projects of the Hungarian Central Statistical Office (HCSO), with respect to the Global OECD Project in general and to its New Regional Approach in particular are connected to the issue of Session 3. “What aspects of progress are the most important for CIS and Eastern European Countries… and how do we measure them?”

Here may I quote the economist-philosopher Amartya Sen[1]: “There is, in fact, something of a gap… between the tradition of evaluative statistics, on the one hand, and views of progress on the other, advanced by visionary social scientists.” He quotes Aristotle “who argued in Nicomachean Ethics that wealth is evidently not the good we are seeking; for it is merely useful and for the sake of something else.” According to William H. Draper[2] III, “Over the last three decades, a new concept has gained traction, positing that while growth is absolutely necessary for development, it is not sufficient… people must be at the center of development. The aim is to offer people more choices and opportunities to make their own decisions for long, healthy and creative lives.” The variables are, among others, “to have a sustainable livelihood and earn money, the ability to live a long and healthy life and to have access to decent schooling… Human development means more than the intrinsic value of personal fulfillment. An economy that hopes to stay competitive amid globalization must draw on everyone’s talents.”

Returning to Amartya Sen’s dichotomous approach, the Hungarian Central Statistical Office is attempting to put evidence based statistical data on a common denominator with the outlook of the “visionary social scientists”. This involves work in two areas to draw up a system of indicators measuring human development.

The outcome of the work is a well-structured set of nearly two hundred human development indicators appropriate – after suitable selection – for the study of any major social area. The system of indicators has already been subject to debate in the Hungarian Academy of Sciences, and on 18 September this year; the HCSO organised a one-day conference to discuss the main points of the working document, with the participation of Mr. E. Giovannini.

Work is also in progress on a new version of the UNDP human development index (HDI). The HDI is chiefly based on globalization considerations, and the modified version is designed to be more appropriate for measuring human development in industrial and post-industrial societies.

The OECD has an approach to measuring and fostering the progress of societies which is different to the UNDP’s measurement of human progress, but the two international organizations are in fact addressing similar challenges.

Below is an outline of the modifications made to the UNDP HDI to take account of European conditions, and a brief discussion of their applicability.

1. The index designed within the HCSO has the name of modified human development index (MHDI).

2. The MHDI is a composite indicator with three components:

– Gross income (before taxation) (GI) per capita: GIPC;

– Percentage of adults in the population 25 years old and older with tertiary educational attainment (PATE)

– Life expectancy at birth.

3. Each component has equal weight in the composite index.

4. The GIPC was chosen in preference to GDP per capita (used by the UNDP) because it is available every year in local administrative units-1, Budapest districts and even the smallest villages (local administrative units-2), whereas GDP is calculated only for countries, regions and counties. At the level of regions (NUTS-2) and counties (NUTS-3), the correlation coefficients for the strength of relationship between per capita GDP and per capita GI are 0,96759, p ................
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