Indian Economy Quiz: Human Development and Indices

The correct answer is B, the United Nations Development Programme. The UNDP brought out the first Human Development Report in 1990, with the Human Development Index as its centrepiece, and it has published the report and the index since. Option A, the World Bank, publishes the World Development Report and indices such as the Human Capital Index, and for many years the Doing Business report, but not the HDI. Option C, the International Monetary Fund, publishes the World Economic Outlook and the Global Financial Stability Report, both concerned with macroeconomic conditions rather than human development. Option D, the World Economic Forum, publishes the Global Competitiveness Report and the Global Gender Gap Report, which is often confused with the UNDP's Gender Inequality Index although the two are built differently. Pairing each index with the body that publishes it is the single most useful piece of preparation for this chapter.

The correct answer is A, Mahbub ul Haq. The Pakistani economist led the team that produced the first Human Development Report for the UNDP in 1990 and designed the index, drawing on the capability approach of Amartya Sen, who advised the work. Option B, Simon Kuznets, is associated with the measurement of national income and with the Kuznets curve, which traces the relation between growth and inequality, not with human development. Option C, Morris David Morris, built the earlier Physical Quality of Life Index from life expectancy at age one, infant mortality and basic literacy, and that index is the usual distractor here. Option D, Gunnar Myrdal, wrote Asian Drama, an influential study of poverty in South Asia, and shared the Nobel Prize in Economics in 1974, but he devised no index. Remember Haq for the HDI, Sen for capabilities and Morris for the PQLI.

The correct answer is D, social inequality. The Human Development Index is built from exactly three dimensions and nothing more: a long and healthy life, knowledge, and a decent standard of living. Inequality is not among them, and that is a deliberate feature of the index, which reports a country's average achievement without saying how it is distributed. Option A, life expectancy at birth, is the indicator of the health dimension. Option B, education, is captured through the mean years of schooling of adults aged twenty-five and above together with the expected years of schooling of a child entering school. Option C, per capita income, enters as gross national income per head measured at purchasing power parity, which replaced gross domestic product per head in the 2010 report. Inequality is handled by a separate measure, the Inequality-adjusted HDI, also introduced in 2010, which discounts each dimension for the inequality in its distribution; the gap between the HDI and the IHDI is read as the loss due to inequality.

The correct answer is A, the Human Development Index. It is the composite measure that puts health, education and income together in a single figure between 0 and 1, built as the geometric mean of one index for each of the three dimensions, and published by the UNDP since 1990. Option B, per capita income, is only one of the three components; taken alone it tells us what an economy produces for each person but nothing about how long people live or how long they stay in school, which was the very criticism that produced the HDI. Option C, life expectancy at birth, is likewise a single indicator, the one that stands for the health dimension. Option D, political stability, is not part of the index at all; it appears in governance ratings published by other bodies. The word to notice in the question is overall, which signals a composite index rather than a single indicator.

The correct answer is B, gross national income per head at purchasing power parity. The switch was made in the 2010 Human Development Report. Gross national income was preferred to gross domestic product because it includes incomes earned abroad and sent home and excludes incomes earned in the country by foreigners, so it is closer to what residents can actually spend; and purchasing power parity is used so that the same basket of goods counts the same in every country. Option A describes the earlier practice of using GDP per head, and is the planted answer for candidates working from an older textbook. Option C, net national product at factor cost, is a national-accounts aggregate used in domestic statistics but not in the index. Option D, household final consumption expenditure, measures spending by households and is used in poverty estimation and in the national accounts, not in the HDI.

The correct answer is B, the geometric mean. Until 2010 the health, education and income indices were averaged arithmetically, which allowed a country to offset a very poor score in one dimension with high scores in the other two. The geometric mean removes that offset: because the three values are multiplied and the cube root taken, a low figure in any one dimension pulls the whole index down, which better reflects the idea that the three are not substitutes for one another. Option A is what the index used before 2010 and is the most common wrong answer. Option C, a weighted median, is not used in the HDI or in any of the companion indices. Option D, the harmonic mean, is used in statistics for averaging rates and ratios, and in the Human Development Report it appears in the Gender Inequality Index, but not in the HDI itself, which makes it a careful distractor.

The correct answer is D, very high human development. The Human Development Report groups countries in four bands: very high at an HDI of 0.800 and above, high from 0.700 to 0.799, medium from 0.550 to 0.699 and low below 0.550. A value of 0.820 clears the 0.800 threshold and so falls in the topmost band. Option A is wrong because low human development means a value below 0.550. Option B is wrong because the medium band ends at 0.699. Option C, high human development, is the band immediately below, running from 0.700 to 0.799, and it is the answer candidates give when they remember that 0.8 is a boundary but forget which side of it the figure falls on. Note that the four thresholds are fixed numbers and do not move from year to year, so a country's band changes only when its own value changes.

The correct answer is A, the Oxford Poverty and Human Development Initiative. The index was introduced in the 2010 Human Development Report and is produced jointly with that initiative at the University of Oxford, whose Alkire-Foster method identifies households deprived at the same time in several of ten indicators grouped under health, education and standard of living. It replaced the Human Poverty Index of 1997. Option B, the International Labour Organization, publishes work on employment, wages and social protection but not this index. Option C, the OECD, produces the Better Life Index and a large body of comparative statistics on its member countries, which is why it looks plausible here. Option D, the Food and Agriculture Organization, reports on undernourishment and food security, work often confused with the Global Hunger Index, which is in fact published by Concern Worldwide with Welthungerhilfe.

The correct answer is A. Morris gave equal weight to three indicators only, life expectancy at age one, the infant mortality rate and basic literacy, and the striking feature of his index is that income appears nowhere in it; he argued that income is a means and that the results of development should be measured directly. Option B describes the Human Development Index, which came later and brought income back as a third dimension alongside health and education. Option C is the trap, because it keeps two of Morris's indicators but adds output per head, which the PQLI deliberately excluded. Option D names dimensions that belong to the Multidimensional Poverty Index, where nutrition, sanitation, drinking water, housing, cooking fuel and assets sit under standard of living. The examination point to carry is the single contrast: PQLI without income, HDI with income.

The correct answer is B, the Lorenz curve, which plots the cumulative share of income or consumption against the cumulative share of population, ranked from poorest to richest. The further the curve sags away from the straight diagonal of perfect equality, the greater the inequality, and the Gini coefficient measures exactly that gap on a scale from 0, perfect equality, to 1, perfect inequality. Option A, the Phillips curve, shows the short-run relation between unemployment and inflation. Option C, the Laffer curve, suggests that tax revenue first rises and then falls as the tax rate increases. Option D, the Kuznets curve, proposes that inequality rises and then falls as an economy develops, so it is about inequality but is not the curve the coefficient is drawn from, which makes it the sharpest distractor in the set. Remember that the Gini coefficient measures distribution, not the level of development.

The correct answer is B, reproductive health, empowerment and the labour market. The Gender Inequality Index replaced the Gender Development Index and the Gender Empowerment Measure of 1995 and shows the human development cost of inequality between women and men in those three dimensions. Option A names the dimensions of the Human Development Index itself, not of the gender index, and is the commonest confusion here. Option C mixes indicators from several measures: literacy belonged to the old education dimension of the HDI, and nutrition is an indicator of the Multidimensional Poverty Index. Option D is close in spirit, because empowerment is measured partly by seats held in parliament, but property ownership is not part of the index. Note also that a separate Gender Development Index was reintroduced in 2014 in a different form, as the ratio of the HDI calculated for women to the HDI calculated for men.

The correct answer is A, the capability approach, 1998. Sen argued that development should be judged by what people are actually able to be and to do, their capabilities, rather than by the goods they own or the income they earn, and this is the reasoning behind the HDI's choice of health, education and a decent standard of living. He received the Nobel Prize in Economics in 1998 for his contributions to welfare economics, and his best known book on the theme is Development as Freedom. Option B names the earlier basic needs approach, associated with the International Labour Organization in the 1970s, and gives a wrong year. Option C has the right approach but the wrong year. Option D is wrong because welfare economics is the field he worked in rather than the name of his approach, although the year given is correct, which is what makes it a careful distractor.