chapter 2: quality of human life. when it is said that there is development in the economy, it...
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Chapter 2: QUALITY OF HUMAN LIFE
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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
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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
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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
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Physical quality of life Index (P.Q.L.I)
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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 :
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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:
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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
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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]
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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
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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
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A H E A D
Advantages of P.Q.L.I
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.
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A H E A D
Advantages of P.Q.L.I
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.
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A H E A D
Advantages of P.Q.L.I
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.
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A H E A D
Advantages of P.Q.L.I
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.
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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
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M A N
Limitations of P.Q.L.I
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.
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M A N
Limitations of P.Q.L.I
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.
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M A N
Limitations of P.Q.L.I
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.
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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
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Human Development Index
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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
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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
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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.
Importance of Human Development
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It is an End
Helps to control population
Increases efficiency
Other resources are better utilized
The society becomes healthy and safe
Conservation of environment
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.
Importance of Human Development
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It is an End
Helps to control population
Increases efficiency
Other resources are better utilized
The society becomes healthy and safe
Conservation of environment
With human development, there is an improvement in health, nutrition and education. This helps to increase efficiency and productivity of labour.
Importance of Human Development
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It is an End
Helps to control population
Increases efficiency
Other resources are better utilized
The society becomes healthy and safe
Conservation of environment
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.
Importance of Human Development
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It is an End
Helps to control population
Increases efficiency
Other resources are better utilized
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
Importance of Human Development
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It is an End
Helps to control population
Increases efficiency
Other resources are better utilized
The society becomes healthy and safe
Conservation of environment
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.
Importance of Human Development
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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
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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.
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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.
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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
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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
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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
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Many Factors are ignored
Problem of inequality is ignored
Imperfect index
Arbitrary use of Weights
Limitations of Human Development Index
Some critics are of view that many indicators of human development such as infant mortality, nutrition, security are totally neglected
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Limitations of Human Development Index
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
Many Factors are ignored
Problem of inequality is ignored
Imperfect index
Arbitrary use of Weights
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Limitations of Human Development 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
Human Development Index
Many Factors are ignored
Problem of inequality is ignored
Imperfect index
Arbitrary use of Weights
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Limitations of Human Development Index
The HDI uses weighted average but it does not have any fruitful impact on measurement. The use of weights is arbitrary
Many Factors are ignored
Problem of inequality is ignored
Imperfect index
Arbitrary use of Weights
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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
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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
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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
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