Fraser Institute proposes an alternative to the United Nations' Human Development Index

Contact:

Fred McMahon, Director of the Social Affairs Centre
The Fraser Institute, Tel: (604) 688-0221, ext. 569
Email fredm@fraserinstitute.ca

Joel Emes, Senior Research Economist
The Fraser Institute, (604) 714-4546,
Email joele@fraserinstitute.ca

For Release: 24 October 2001

VANCOUVER, BC— Canada ranks sixteenth on the Fraser Institute's Measuring Development: An Index of Human Progress, released today. This new publication provides a more complete view of the recent history and current state of development throughout the world than does the United Nations' often-quoted Human Development Index.

The Fraser Institute's Index of Human Progress ranks the United States first, Switzerland second, Luxembourg third, Denmark fourth, and Japan fifth. Canada ranked sixteenth in 1999 out of 128 countries. Canada's score on the Index of Human Progress improved from 73.2 in 1975 to 94.0 in 1999 (a 28.5 percent increase); the score of the United States improved from 81.4 in 1975 to 105.8 in 1999 (a 30.1 percent increase).

The United Nations' Human Development Index

Since its introduction in 1990, the United Nations' Human Development Index has attracted a great deal of attention as a measure by which to gauge the development of nations. This is particularly true in Canada, as the federal government repeatedly touts Canada's standing at or near the top of the Human Development Index since the inaugural Human Development Report 1990.

Its main weakness is that the arbitrary adjustment of GDP in the Human Development Index distorts differences among countries. This distortion is especially pronounced for countries with high income. While there is some historical information in the Human Development Report, the emphasis is on the year for which the most recent data are available. "Measuring development requires that we know how a country has progressed over time, not just how it compares to other countries in a single year," says Joel Emes, senior research economist at The Fraser Institute and author of the study.

The United Nations assumes that GDP per capita should be discounted on the grounds that per capita income contributes minimally to development when it rises past a certain modest amount.

"When GDP per capita increases, the well-being of the citizens of that country increases. By adjusting GDP per capita as it does, the United Nations does not take adequate account of this important indicator in compiling its development index," says Fred McMahon, director of the social affairs center at the Fraser Institute.

The Fraser Institute's Index of Human Progress

The Index of Human Progress improves on the United Nations' Human Development Index by using unadjusted GDP per capita (1995 US dollars) and including six additional indicators that measure desirable outcomes. As long as the data are reliable, a greater number of indicators permits clearer distinctions among countries. In addition, using more indicators makes the Index less vulnerable to any unreliability in data as the impact of a biased indicator on the overall score is reduced when more indicators are used. The cost of increasing the number of indicators is that fewer countries can be included in the Index of Human Progress (128 rather than the United Nations' 162) because some do not have complete data.

The Fraser Institute's Index of Human Progress uses the following indicators:

Health
1.1) life expectancy

1.2) infant mortality (per 1,000 live births)

1.3) mortality of children under five years of age (per 1,000 live births)

1.4) adult mortality rate (number of adults, per 1,000 adults, not expected to survive to age 60
Education
2.1) literacy rate

2.2) combined enrolment rate (combined primary, secondary and tertiary)
Technology
3.1) number of televisions (per 1,000 persons)

3.2) number of radios (per 1,000 persons)

3.3) telephone service (per 1,000 persons)

"A key indicator of the state of development in a country is the diffusion of technology within it. The availability of leisure goods indicates that citizens have choices about how to spend their time and money," says McMahon, "telephone service is included because an effective communications infrastructure is important for a country to get beyond a moderate level of development."
GDP (unadjusted GDP per capita in 1995 US dollars)

Rankings

The top five countries and the increase in their scores between 1975 and 1999 are: (1) United States (81.4 to 105.8), (2) Switzerland (86.0 to 105.5), (3) Luxembourg (69.6 to 104.8), (4) Denmark (81.2 to 103.9), and (5) Japan (76.2 to 103.7). Canada came in sixteenth with a score of 94.0 in 1999, up from 73.2 in 1975.

The United States was ranked second for 1975 through 1990 and first for 1995 and 1999. Canada ranked sixth in 1975, tenth in 1980, eighth in 1985, seventh in 1990, eleventh in 1995 and sixteenth in 1999.

Lowest ranked countries are: (124) Ethiopia (11.6 in 1980 to 16.7 in 1999), (125) Burundi (11.4 in 1975 to 16.3 in 1999), (126) Mozambique (15.0 in 1980 to 15.1 in 1999), (127) Burkina Faso (7.4 in 1975 to13.5 in 1999), and (128) Niger (4.3 in 1975 to 12.2 in 1999).

One of the most important results of this study is that most countries show an increase in their score-124 out of the 128 countries ranked have improved.

"Perhaps the most remarkable finding of the study is how much people's lives have improved over the past twenty-five years," says McMahon, "despite all the misleading statistics from anti-globalization forces, the world is becoming a better place to live for most people."

Established in 1974, The Fraser Institute is an independent public policy organization based in Vancouver with offices in Calgary and Toronto.