1.3.1. Inequality adjusted HDI (IHDI)

The 2010 Report introduced the Inequality-adjusted HDI (IHDI), a measure of the level of human development of people in a society that accounts for inequality. Under perfect equality the IHDI is equal to the HDI, but falls below the HDI when inequality rises. In this sense, the IHDI is the actual level of human development (taking into account inequality), while the

HDI can be viewed as an index of the potential human development that could be achieved if there is no inequality.

The IHDI takes into account not only a country’s average human development, as measured by health, education and income indicators, but also how it is distributed. IHDI accounts for inequalities in life expectancy, schooling and income, by “discounting” each dimension’s average value according to its level of inequality. The difference between the HDI and the IHDI measures the “loss” in potential human development due to inequality.