2015 marks 25 years since the first Human Development Report introduced a new approach for advancing human flourishing. The expression “human development” is likely familiar; it is understood and used in different ways around the world.

Measuring the human progress and well-being has itself becoming an industry: last year the Human Development Report Office (HDRO) listed over a hundred indices currently used to measure some aspect, or aspects, of human progress -wellbeing, happiness, peace.

Human development grew out of global discussions on the links between economic growth and development in the 1980s. In previous decades, GDP and economic growth emerged as leading indicator of national progress in many countries, yet GDP was never intended to be used as a measure of wellbeing. In the 1970s and 80s the development debate considered using alternative focuses, including giving greater emphasis on employment, followed by redistribution with growth, whether people had their basic needs met and structural adjustment with a human face.

These ideas helped pave the way for the human development approach, about expanding the richness of human life, rather than simply the richness of the economy in which people live.

One of the more important achievements of the human development approach, as embodied in successive Human Development Reports, has been the growing acceptance that money-metric measures, such as GDP per capita, are inadequate proxies of development.

The first Human Development Report introduced the Human Development Index (HDI) as a measure of achievement in the basic dimensions of human development and it has become widely accepted in development discourse.

Over the years, some modifications and refinements have been made to the HDI. Indeed, the critics of the index and their concerns are stimulating refinements to the index and the development of companion indices which help paint a broader picture of global human development.

However, the HDI has been subject to criticism that questions its validity. In this context, it is important to understand its nature and what is it and what is not.

The Human Development Index (HDI) was a pioneer and remains one of the – if not the – most influential indices in development debate. It was constructed as a focus measure, or a composite index, and as such concentrates on some basic dimensions of human development: it is an equally weighted average weighted (each dimension given the weight of 1) of a nation’s longevity, education and standard of living (income per capita).

By definition, composite indices provide a single number to synthesize the state of affairs, but cannot provide a comprehensive picture of the state of human development as other measures such as Human Development Accounting does.

Three things prompted to come up with the HDI as measure:

• First, the HDI captures these basic dimensions of human development: lead a long and healthy life, acquire knowledge and have access to resources needed for a decent standard of living. Without them, many other opportunities remain inaccessible.
• Second, if only breadth measures of human development are presented, people will revert to GDP per capita for a single measure of development. The HDI changed that outlook.
• Third, for measuring human well-being, one needs as vulgar but not as narrow a measure like income per capita, which is blind to broader aspects of human lives. The HDI provides a broader measure.

Five observations are therefore quite pertinent about the HDI:

• First, the HDI is not a comprehensive measure of human development. It just focuses on the basic dimensions but does not take into account a number of other important ones.
• Second, it is composed of long-term human development outcomes. Thus it does not reflect the input efforts in terms of policies nor can it measure short-term achievements.
• Third, it shares all the limitations of composite measures. But keeping it simple ensures its acceptability, understanding and predictability.
• Fourth, the HDI is an average measure and thus masks a series of disparities and inequalities within countries. Disaggregation of the HDI in terms of gender, regions and ethnic groups can be and has been used widely for policy formulation, at the country level.
• Fifth, income enters into the HDI as a proxy for resources needed to have a decent standard of living - how it is transformed into the health and education dimensions of the HDI.

Any suggested measure for any concept cannot fully capture the richness, the breadth and the depth of the concept itself. This is true of the notion of human development as well. The HDI cannot provide a complete picture of human development in any situation. It has to be supplemented with other useful indicators (a dashboard) in order to get a more comprehensive view. However, as a focus measure, it has been successful for advocacy, for initiating healthy competition among societies and for raising awareness.

If a metaphor is used, human development accounting represents a house and the HDI is the door to the house. One should not mistake the door to be the house and one should not stop at the door, rather one should enter the house.