Friday, November 05, 2010

The Human Development Report

The United Nations has released its annual Human Development Report. And in a bit of a shock, it ranks New Zealand as the third most developed country in the world. Oh, sure, our GNI is low compared to other western nations - but our non-economic indicators, things like health and education, more than make up for it.

The reason its a bit of a shock is because previously NZ has ranked much lower, in the high teens. The reason our ranking has improved is not because of any improvement in the underlying data, but because of a methodological change in the way they are combined (previously, they were simply averaged; now they use the geometric mean, which results in a lower score where there are wider gaps between the dimensions. This means that instead of being three of four places above our GNI rank, we are now thirty.

(Not that our underlying scores are anything to sniff at. NZ's life expectancy is pretty standard for a developed country. But our mean length of education is two years higher, and our expected length of education four years higher. In other words, we do well because we have a high school-leaving age, a lot of ECE and mass tertiary education. Together these mean our combined non-economic value is 0.98, compared to ~0.9 for most other developed nations).

The UN has also introduced a subindex which corrects for the effects of income and gender inequality. Unfortunately, there's no data on this for New Zealand, but it tends to result in substantial decreases, which get worse the less developed a country is. At the bottom end, some countries lose 30 - 40% of their score on this measure, which tells you that development is spread very unevenly. Its a good addition, especially in light of the recent focus on the effects of inequality, and hopefully it will lead to a greater focus on equal development rather than on development for the rich.

You can download the full HDR here [PDF, large].