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Inequality Adjusted HDI (IHDI)

Inequality Adjusted HDI (IHDI)

  • IHDI adjusts the HDI for inequalities in terms of level of achievement in the three dimensions.
  • Mathematically, a ratio of Geometric mean to Arithmetic mean is calculated for each of the three variables used to calculate HDI within a particular country. This ratio is subtracted from 1 to represent inequality in these parameters. This inequality coefficient for each distribution (for life-expectancy, education and standard of living) is then multiplied with each of the indices. Geometric mean of these new indices provides the value for IHDI.  Inequality Adjusted HDI (IHDI)
  • Inequality in income and years of schooling is measured across individuals while inequality in life expectancy is measured across age-intervals.
  • IHDI is equal to HDI when there is no inequality. In presence of inequality, IHDI value is less than that of HDI value. The greater the difference between the two, the greater is inequality.
  • The percentage loss to the HDI due to inequalities in each dimension is calculated as: Loss= 1- (IHDI/HDI)
  • The IHDI relies on data on income/consumption and years of schooling from major publicly available databases, which contain national household surveys harmonized to common international standards: Eurostat’s EU Survey on Income and Living Conditions, Luxembourg Income Study, World Bank’s International Income Distribution Database, United Nations Children’s Fund’s Multiple Indicators Cluster Survey, US Agency for International Development’s Demographic and Health Survey, World Health Organization’s World Health Survey, and United Nations University’s World Income Inequality Database. For inequality in the health dimension, we used the abridged life tables from the United Nations Population Division.  Inequality Adjusted HDI (IHDI)
  • India ranks same for both HDI and Inequality Adjusted HDI at 135, but the importance of calculating Inequality Adjusted HDI is that, the ‘Absolute figure’ tells us how much human development is lost due to inequality within a country.

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