chapter 2: quality of human life. when it is said that there is development in the economy, it...

Chapter 2: QUALITY OF HUMAN LIFE

When it is said that there is development in the economy, it should obviously mean that the quality of life of the people in the economy is improving.

A country is formed by the people living in it.

Introduction

Previously, economic development of any country was measured by gross national product and per capita income

However, other factors were completely ignored and only monetary or economic aspect was given extreme importance.

Gross National Product

Per Capita Income

Other Factors

Measurement of Economic Development – Previously

Recently there are two approaches developed by economist to measure economic development in terms of quality of life:

Physical quality of life Index (P.Q.L.I)

Human Development Index

(H.Q.I)

Measurement of Economic Development - Recent

Physical quality of life Index (P.Q.L.I)

Meaning of Physical Quality of Life Index Quality of life refers to overall well-being of people of a

country.

Environment Social Security

National Security Political Freedom

Overall Infrastructure

It does not depend on economic factors but on socio-political factors like :

Physical Quality of Life Index (P.Q.L.I) was developed by famous economist Morris David in 1979 for 23 developed and developing countries.

Life Expectant Rate (L.E.I)

Infant Mortality Rate (I.M.I)

Basic Literacy Rate (B.L.I)

Indicators of P.Q.L.I

Morris David used the following three indicators to prepare a composite index known as Physical Quality of Life Index:

Any person above the age of 7 year who can read and write in any one language with an ability to understand it is considered as literate

Infant Mortality Rate Basic Literacy Rate

Average number of year a person is expected to live

Number of infants dying within one year of their birth out of every 1000 births

Life Expectant Rate

66.8 years

47 per 1000 74.04%

As per 2011 Census

Indicators of P.Q.L.I

As per 2011 Census As per 2011 Census

For each of the indicator, the performance of individual country is rated on a scale of 1 to 100 where 1 represents the worst performance and 100 represent the best performance

Formula to obtain P.Q.L.I =

Example: Suppose, the L.E.I. for India is rated as 75, the I.M.I is rated as 40 and B.L.I. is rated as 65, then the P.Q.L.I will be ?

Calculation of P.Q.L.I

Answer: 60 [(75+40+65)/3]

What are the advantages and limitation of P.Q.L.I ?Physical Quality of Life Index (P.Q.L.I) is a composite indicator to measure economic development of a nation. P.Q.L.I is based on three indicators i.e. Life Expectancy Rate, Infant Mortality Rate and Basic Literacy Rate

Smart Code: AHEADAdvantage of P.Q.L.I :

A - Aspect of welfare has been consideredH - Helps the government for analysisE - Easy to compareA - Also Considers DistributionD - Data required is easily available

A H E A D

Advantages of P.Q.L.I

Aspect of welfare has been considered

The three indicator i.e. life expectancy rate, infant mortality rate and literacy rate very well represent the welfare of the people of the country. A country wherein all the three indicators are good can be said to be a developed economy

A H E A D


Helps the government for analysisP.Q.L.I helps to government to understand the overall welfare in the economy and how well its welfare policies are being implemented. This helps the government to take corrective action.

A H E A D


Easy to compareThe method followed to measure P.Q.L.I is standard for all the countries. Therefore, it can be used to make comparison between countries and this helps the relatively underdeveloped countries to take corrective measure.

A H E A D


Also Considers Distribution

The P.Q.L.I considers the distribution of welfare in the country. A country cannot have a high average of literacy rate, life expectancy and low infant mortality rate unless a large part of the population is covered by the benefits of economic development.

A H E A D


Data required is easily available

The data relating to all the three indicators is easily available in the census report. Therefore, measurement of P.Q.L.I is a simple.

Smart Code: MAN

Limitations of P.Q.L.I

M - Many other factors have been ignoredA - All factors have been given equal importanceN - Not a proper measure of economic development

M A N


Many other factors have been ignoredP.Q.L.I ignores many factors which influence the quality of life such as employment, housing, justice, social security as well as human rights.

M A N


All factors have been given equal importance

P.Q.L.I is a simple average of literacy rate, infant mortality rate and life expectancy rate i.e. all the factors have been giving equal weight age. However, it is difficult to understand the rationale behind giving equal importance to all factors.

M A N


Not a proper measure of economic developmentP.Q.L.I. does not explain the structural change in the economy of a country. Moreover, it does not at all consider economic or monetary concept. Hence, it is a poor measure of economic development as well as economic growth.

Inspite of these drawbacks, P.Q.L.I. is considered as an improvement over traditional measure of economic welfare. However, recently developed Human Development Index (HDI) is a better and more refined version of P.Q.L.I.

Conclusion

What is Human Development ? United Nations Development Programme has defined human

development as a process of enlarging peoples’ choices and their level of well-being.

Human Development is measured by constructing Human Development Index (H.D.I)

According to Human Development Report, the three most important choices of people are:

To lead a long and healthy life

To acquire knowledge To enjoy a decent standard of living

Importance of Human Development

Human development is extremely important and it depends on much more than just growth of income.

Importance :

1. It is an End2. Helps to control population3. Increases efficiency4. Other resources are better utilized5. The society becomes healthy and safe6. Conservation of environment

It is an End

Helps to control population

Increases efficiency

Other resources are better utilized

The society becomes healthy and safe

Conservation of environment

Economic growth is the means and human development is an end. Economic growth enables an economy to improve human condition and enlarge the choices of the people which finally lead to their development.


It is an End






Human development includes providing better education facilities. Educated people understand the benefits of having a small family. Increased medical facilities help to reduce the infant mortality rate.


It is an End






With human development, there is an improvement in health, nutrition and education. This helps to increase efficiency and productivity of labour.


It is an End






The utilization of resources highly depends on the efficiency of the human resource. Since, the efficiency of labour increases, other resources are also better utilized.


It is an End




The society becomes healthy and safeConservation of environment

Educated people who are bestowed with proper rights do not get involved in anti-social activities like riots, terrorism, robbery etc. Therefore, a safe and healthy society is created


It is an End






Educated people are aware about the negative effect that over population, deforestation, heavy industrialization etc have on the environment. Therefore, they make an extra effort to save the environment.


What is Human Development Index ? Human Development is measured by constructing Human

Development Index (H.D.I)

The Human Development Index (HDI) is a composite statistic of life expectancy, education, and income indices used to rank

countries.

It was created by :

Pakistani economist Mahbub ul Haq

and Indian economist Amartya Sen

in 1990 and was published by the United Nations Development Programme

http://en.wikipedia.org/wiki/Mahbub_ul_Haq




http://en.wikipedia.org/wiki/Amartya_Sen



H.D.I. makes it clear that income cannot be considered as a yardstick for measuring human development because well-being depends on use of income and not on level of income

How is Human Development Index calculated ?

For constructing H.D.I, we have to prepare index number for each of the three dimensions of human development.

Sr. No Dimension Index1 Long and healthy life dimension Life Expectancy Index2 Knowledge dimension Education Index3 Standard of living dimension GDP per capita

Note: Education index is weighted average of adult literacy rate as well as the primary, secondary and university enrollment ratio.

Calculating Human Development IndexIn order to calculate the index, the following formula has been derived:

Dimension Index = Actual Value - Minimum ValueMaximum Value - Minimum Value

For the purpose of maximum value and minimum value, the following table has been provided:

Indicators Maximum Value

Minimum Value

Life expectancy at birth (years) 85 25Adult literacy rate (%) 100 0Combined gross enrollment (%) 100 0GDP per capita (PPP US $) 40,000 0

Source : Human Development Report 2005.

Calculating Life Expectancy Index & H.D.IEg. If the actual life expectancy in India is 66 years, then the life expectancy index will be calculated as follows:

Life Expectancy Index = 66-25 / 85-25 = 41/60 = 0.68

Finally, HDI is calculated by taking an average of three dimension indices:

H.D.I = Life Expectancy Index + Educational

Index + GDP Index

3

Classification of countries on basis of HDIHuman Development is measured by constructing Human Development Index (H.D.I). The Human Development Index (HDI) is a composite statistic of life expectancy, education, and income indices used to rank countries.

According to Human Development Report, 2005, different countries are classified into 3 group of the basis of HDI in the following manner:

Sr. No Group Range Example1 High HD group 0.8 and

aboveNorway, USA, Japan

2 Medium HD group 0.5 to 0.8 China, Sri Lanka, India3 Low HD group Less than 0.5 Pakistan, Bangladesh

Limitations of Human Development Index

Limitations :

1. Many Factors are ignored2. Problem of inequality is ignored3. Imperfect index4. Arbitrary use of Weights

Human Development is measured by constructing H.D.I. The Human Development Index (HDI) is a composite statistic of life expectancy, education, and income indices used to rank countries

Many Factors are ignored

Problem of inequality is ignored

Imperfect index

Arbitrary use of Weights


Some critics are of view that many indicators of human development such as infant mortality, nutrition, security are totally neglected


Since HDI is an overall average, it reflects the entire economy as a whole. HDI of a country neglects the problem of inequality. It treats all people and all regions at par



Imperfect index



According to Prof. Amartya Sen, a Nobel Laureate, the HDI is an imperfect index which tries to catch complex reality of human development in one simple number

Dimension Long & Healthy Life Knowledge Decent std

of living

IndicatorsLife

Expectancy at birth

Mean yrs of

schooling

expected yrs of schooling

GNP per capita

Dimension Index

Health Index

Education Index

Income Index




Imperfect index



The HDI uses weighted average but it does not have any fruitful impact on measurement. The use of weights is arbitrary



Imperfect index


Human Development Index of India India ranks 136 among 186 countries on its Human

Development Index (HDI) as per the Human Development Report 2013 published by the United Nations

The HDI value of India is 0.647

China has been ranked much higher than India

The reason for the low ranking is obvious as India compares poorly with other countries on indicators such as life expectancy, education and per capita income

Indicators for Human Development Index of India

Life ExpectancyAs per the Human Development Report, 2011, the life expectancy in India is 65.8 years (65.77 for males, and 67.95 year for females). When compared to European countries, it is very low.

Literacy RateThe literacy rate in India in 2011 was 74.4% (82.14% for males and 65.45% for females). This is much lesser than developed nations. Also, average number of a years spent by a person in school is 10.3 years in India compared to global average of 15 years

PovertyThere are still 400 million people in India below the poverty line. A lot of people do not have access to clean water and proper sanitation facilities

Human Development Index of India

Over 20 years since the beginning in 1990, HDI value has increased more than double i.e. from 0.301 to 0.647. We are currently in the medium HDI group and it will take us a long time to reach the high HDI group.

Human Development Index Value In India (only for your reference)

Year HDI Value1990 0.3012002 0.5772010 0.647

Source – Human Development Index Report 2013

THANK YOU

To subscribe for presentations, please call on 8898 587 585

chapter 2: quality of human life. when it is said that there is development in the economy, it...

Documents