Figure 1. Components of HDI

The education component of the HDI is measured by mean of years of schooling for adults aged 25 years and expected years of schooling for children of school entering age. Mean years of schooling is estimated based on educational attainment data from censuses and surveys available in the UNESCO Institute for Statistics database and Barro and Lee (2010) methodology. Expected years of schooling estimates are based on enrolment by age at all levels of education and population of official school age for each level of education. Expected years of schooling is capped at 18 years. The education index is the geometric mean of two indices.

The decent standard of living component is measured by GNI per capita (PPP$). The HDI uses the logarithm of income, to reflect the diminishing importance of income with increasing GNI. The life expectancy at birth component of the HDI is calculated using a minimum value of 20 years and maximum value of 83.57 years. The scores for the three HDI dimension indices are then aggregated into a composite index using geometric mean.

Given the imperfect nature of wealth as gauge of human development, the HDI offers a powerful alternative to GDP and GNI for measuring the relative socio-economic progress at national and sub-national levels. Comparing HDI and per capita income ranks of countries, regions or ethnic groups within countries highlights the relationship between their material wealth on the one hand and their human development on the other.