Comparison of GDP and the Human Development Index (HDI).

This Page authored by Meherun Ahmed, Carleton College
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This material was originally developed as part of the Carleton College Teaching Activity Collection
through its collaboration with the SERC Pedagogic Service.
Initial Publication Date: October 22, 2008

Summary

This assignment exposes students to data on economic growth and development as commonly measured by per capita GDP and the Human Development Index (HDI) for 100 countries of the world. There is a big debate about how good an indicator HDI is compared to GDP per capita as a measure of development. In class students learn how to calculate the HDI. They also read a seminal paper by Allen Kelley that discusses pitfalls of both measures.

  1. In this exercise they will collect the three variables that are used in the HDI calculations from the latest Human Development Report published by the United Nations Development Program (UNDP) for 100 countries.
  2. They will calculate the HDI and then compare it with the GDP per capita variable.
  3. They would then replicate Allen Kelley's paper.
  4. They will also test the sensitivity of their findings using different parameter values.
  5. After plotting their data in charts and graphs, they will analyze their results.

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Learning Goals

This assignment is designed to help students:
  1. Have a sense of the level of development in these countries and understand the role of education, health and income in economic development.
  2. Think critically about how the income and education and health variables are calculated.
  3. Identify the flaws in the estimation method used by the UNDP in calculating the HDI, specially the departure from economic theory.
  4. Become aware of the fact that small changes in the parameter values can change ranking of the countries significantly.
  5. Finally analyze their findings effectively presenting the data in an appropriate manner (tables, and graphs).

Context for Use

This assignment was designed for a class of 25 students who have taken principles of economics. They have had lectures on concepts of development and the relationship between economic growth and development. In addition, students would require basic spreadsheet skills to complete the assignment.

Description and Teaching Materials

The assignment handout designed to be distributed in class contains all of the information the students will require to complete the task. The students will also have access to Allen Kelley's paper that they will be replicating using newer data, through class web page. This would enhance their quantitative reasoning skills as it involves data collection, estimation, presentation in charts and graphs and analysis in light of the theory learned in class.

Materials:

Teaching Notes and Tips

Collecting and processing data takes time, especially for students who have never done so or lack the necessary skills in using a spread sheet. I post the assignment in class web page and ask them to print out a copy and bring it to class. When I lecture on the development indicators, I brief them what they need to do in their assignments. They can relate to the tasks better in this way. It might be easier for the instructor in grading and guiding students in various stages, if all students collected data on the same set of countries.

Assessment

I provide students with a list of grading criteria. They need to pay attention to the following:
  • Accuracy in use of data
  • Quality of argument
  • Quality of writing
  • Quality of data presentation

References and Resources