Human Poverty Index
The Human Poverty Index (HPI) was a composite statistical measure introduced by the United Nations Development Programme (UNDP) in its 1997 Human Development Report to quantify poverty not merely through income shortfalls but via direct deprivations in three core dimensions of human well-being: a long and healthy life (longevity), access to knowledge (education), and a decent standard of living (basic amenities and nutrition).[1] For developing countries, the HPI-1 variant aggregated deprivations including the proportion of people unlikely to survive past age 40, the adult illiteracy rate, and the unweighted average share lacking sustainable access to safe water or experiencing child malnutrition (underweight prevalence), using a formula that raised individual deprivation rates to the power of three before averaging and taking the cube root to emphasize severe shortfalls.[2] A separate HPI-2 applied to high-income OECD nations, incorporating indicators such as long-term unemployment rates, income below half the median, restricted access to healthcare, and low child weights.[2] Published annually in UNDP's Human Development Reports from 1997 to 2009, the index aimed to reveal "hidden" poverty overlooked by GDP or headcount ratios, influencing global policy discussions on multidimensional deprivation, though its national-level aggregation and equal weighting of dimensions drew methodological critiques for lacking household-level data and failing to capture overlapping hardships or individual-level incidence.[2] In 2010, the HPI was discontinued and supplanted by the Multidimensional Poverty Index (MPI), which employs household survey data and an intensity-adjusted counting approach to better identify acutely poor individuals and track deprivation combinations.[2]Origins and Development
Introduction by UNDP in 1997
The Human Poverty Index (HPI) was introduced by the United Nations Development Programme (UNDP) in its 1997 Human Development Report, marking the first multidimensional measure of poverty designed to extend beyond traditional income-based assessments.[3] This index aimed to quantify deprivations in fundamental human capabilities, emphasizing poverty as a denial of essential choices and opportunities essential for leading a long, healthy, and creative life, rather than solely as low monetary resources.[1] By focusing on non-income dimensions, the HPI sought to reveal "hidden" poverty in societies where aggregate income growth masked persistent human deprivations, thereby complementing metrics like gross national product per capita.[3] The development of the HPI built on the human development paradigm pioneered by Pakistani economist Mahbub ul Haq, who led the UNDP's efforts to shift global development thinking toward people-centered indicators during his tenure as the program's administrator from 1989 to 1995.[4] Haq's framework drew substantially from the capabilities approach articulated by Nobel laureate Amartya Sen, which posits that human well-being should be evaluated not by resources or utilities but by individuals' substantive freedoms to achieve valued functionings, such as being healthy, knowledgeable, and socially active.[4] This philosophical foundation underscored the HPI's rationale: income alone fails to capture how deprivations in health, education, and living conditions constrain human potential, particularly in contexts where markets and governments inadequately address these gaps.[1] Initially formulated as HPI-1 for developing countries, the index targeted deprivations in three core dimensions reflected in the broader Human Development Index: longevity (measured via under-five mortality rates), knowledge (via adult literacy and school enrollment), and decent living standards (via access to safe water and child malnutrition).[1] This version was applied to 78 developing nations in the 1997 report, highlighting stark inequalities; for instance, it ranked countries like China and India lower than income metrics suggested, exposing vulnerabilities in basic human needs despite economic progress.[3] The UNDP positioned HPI-1 as a tool for policymakers to prioritize interventions in overlooked areas, arguing that addressing these direct deprivations could yield more immediate gains in human welfare than indirect income redistribution.[1]Formulation and Initial Rationale
The Human Poverty Index (HPI) was formulated by the United Nations Development Programme (UNDP) to address the shortcomings of traditional income-based poverty measures, such as headcount ratios and GDP per capita, which were critiqued for oversimplifying poverty by focusing solely on monetary thresholds and failing to capture its multidimensional nature.[1] These measures often overlooked deprivations in non-income dimensions like health and education, ignored the severity and depth of poverty, and did not adequately reflect how economic growth translates into reduced human suffering, as evidenced by cross-country comparisons where high income poverty coexisted with low overall deprivation or vice versa.[1] The initial rationale emphasized that poverty fundamentally entails the denial of basic opportunities and choices essential for human development, necessitating an index that integrates empirical indicators of direct human deprivations rather than indirect proxies like income.[1] Conceptually grounded in a capabilities approach, the HPI sought to measure deprivations across core human functionings—longevity, knowledge, and decent living standards—drawing on first-principles reasoning that human well-being depends on achieving basic outcomes, not just resource possession.[1] This design privileged verifiable empirical data, such as under-5 mortality rates as a proxy for health vulnerabilities and adult illiteracy rates for educational deficits, to highlight tangible human costs often masked by aggregate income metrics.[1] By focusing on these dimensions, the index aimed to reveal "hidden" poverty in societies where average incomes might suggest progress, but uneven deprivations persisted, thereby providing a more causal and realistic assessment of poverty's impact on lived experiences.[1] For aggregation, the HPI employed a generalized mean with an intermediate exponent (α = 3) akin to harmonic means in effect, which penalizes imbalances across deprivation dimensions by weighting larger shortfalls more heavily, ensuring the index reflects not just the incidence but the uneven distribution of hardships for a balanced portrayal of poverty.[1] This method was selected to avoid the arithmetic averaging pitfalls of earlier indices, which could understate the compounded effects of deprivations in one area offsetting gains in another, thus promoting a holistic view that incentivizes policies addressing interconnected failures rather than isolated income gains.[1]Expansion to HPI-2 for Developed Countries
The Human Poverty Index for high-income countries, designated HPI-2, was introduced by the United Nations Development Programme (UNDP) in the 1998 Human Development Report to assess multidimensional deprivations in industrialized nations, where absolute survival and access challenges differ markedly from those in developing economies.[5] This adaptation recognized that poverty in wealthy contexts often manifests through relative inequalities and social isolation rather than basic subsistence shortfalls, necessitating indicators attuned to advanced welfare states.[6] HPI-2 was computed annually for a subset of Organisation for Economic Co-operation and Development (OECD) members, drawing on harmonized data from sources including OECD employment databases, national literacy surveys, and income distribution statistics as of the late 1990s.[7] HPI-2 retained the core deprivational focus of its predecessor but substituted context-specific metrics: the probability at birth of not surviving to age 60 (P₁, reflecting longevity shortfalls adjusted for higher life expectancies); the percentage of adults lacking functional literacy skills (P₂, emphasizing knowledge gaps in literate societies); the share of the population living below 50% of median disposable income (P₃, capturing relative economic deprivation and income inequality via a poverty threshold tied to national medians rather than global absolutes); and the rate of long-term unemployment lasting 12 months or more (P₄, proxying social exclusion from labor markets).[6][8] These components shifted emphasis toward inequality in resource distribution—evident in P₃'s median-based line, which rises with overall prosperity—and exclusionary risks like persistent joblessness, which data from OECD labor force surveys showed affecting 1-3% of the workforce in select European nations by 1997.[7] Initial HPI-2 rankings in the 1998 report highlighted disparities among OECD peers, with countries like Ireland and Portugal scoring higher (indicating greater deprivation) due to elevated long-term unemployment rates exceeding 5% amid economic transitions, while Nordic states such as Sweden registered lower values around 10% on the index, driven by stronger social safety nets and lower relative poverty shares under 10%.[5] This expansion enabled cross-national comparisons within high-income groups, using UNDP-compiled datasets validated against primary sources like Eurostat for income and UNESCO for literacy, though limitations in cross-country data comparability—such as varying definitions of functional illiteracy—were noted in subsequent methodological refinements.[9] By prioritizing these adapted indicators, HPI-2 underscored how poverty persists in affluent settings through mechanisms like labor market rigidities and unequal income shares, informing targeted analyses distinct from income-only metrics.[6]Methodology
Components of HPI-1 for Developing Countries
The Human Poverty Index for developing countries (HPI-1) assesses deprivations across three dimensions: longevity, knowledge, and decent living standards, using incidence rates expressed as percentages of the population affected. The longevity dimension is captured by P₁, defined as the probability at birth of not surviving to age 40, multiplied by 100 to yield a percentage. This indicator is calculated from under-five mortality rates and adult mortality estimates, reflecting early-life vulnerabilities prevalent in low-income settings where infectious diseases and malnutrition elevate child death risks. Data for P₁ are sourced from the United Nations Population Division's world population prospects, which compile vital registration and sample survey data from national statistical offices.[1] The knowledge dimension employs P₂, the adult illiteracy rate among individuals aged 15 years and older, measuring exclusion from basic literacy skills essential for personal and economic agency. Illiteracy thresholds are based on standardized assessments of reading and writing ability in any language, with rates derived from household surveys and censuses reported to UNESCO's Institute for Statistics. In developing countries, where school attendance is often disrupted by poverty or conflict, P₂ highlights systemic failures in primary education access, with data reflecting population averages rather than individual-level deprivations.[1] The decent living standards dimension aggregates P₃ as the unweighted arithmetic mean of three equally weighted indicators: the percentage of the population lacking sustainable access to improved drinking water sources (such as protected wells or piped systems), the percentage lacking access to improved sanitation facilities (excluding open defecation or unimproved latrines), and the percentage of children under age five who are underweight for their age (below minus two standard deviations from the median weight-for-age of the WHO reference population). These thresholds target basic infrastructural and nutritional deficits unique to resource-constrained environments, where inadequate water and sanitation contribute to diarrheal diseases accounting for over 800,000 annual child deaths globally as of 2000 data. Water and sanitation data come from the WHO/UNICEF Joint Monitoring Programme, which uses national surveys and service provider records; underweight prevalence is from UNICEF and WHO multiple indicator cluster surveys and demographic health surveys, focusing on anthropometric measurements from representative household samples.[5] Each deprivation measure (P₁, P₂, P₃) is bounded at a maximum of 100% to normalize extreme values and ensure balanced contribution across dimensions, with all indicators representing national population averages from the most recent available surveys, typically lagged by 1-3 years to account for data collection cycles. The composite HPI-1 is then derived via the formula \mathrm{HPI-1} = \left[ \frac{1}{3} (P_1^3 + P_2^3 + P_3^3) \right]^{1/3}, where the cubic root aggregation (with parameter α=3) penalizes multidimensional overlaps more heavily than arithmetic means, prioritizing depth of poverty in aggregation. This methodology, specified in UNDP technical notes, relies on verified empirical data to avoid overreliance on income proxies, though it inherits limitations from survey coverage gaps in remote or conflict-affected areas.[1]Components of HPI-2 for High-Income OECD Countries
The HPI-2 adapts the human poverty measurement framework to high-income OECD countries by emphasizing deprivations that persist despite widespread affluence, such as barriers to full social participation and skill deficits, rather than acute survival threats prevalent in developing contexts. It comprises four indicators representing health, education, living standards, and social inclusion, each expressed as a deprivation rate in percentage terms. These were selected by the United Nations Development Programme (UNDP) to highlight non-income facets of poverty using standardized, comparable data from OECD member states.[10] In the health dimension, deprivation is quantified as P1, the probability at birth of not surviving to age 60, derived from national life tables that account for mortality risks across the lifespan, including chronic diseases and healthcare access in mature populations. For the education dimension, P2 measures the percentage of adults aged 16-65 lacking functional literacy skills, assessed through surveys like the OECD's Programme for the International Assessment of Adult Competencies (PIAAC), which evaluate practical reading and numeracy abilities essential for employment and civic engagement. The living standards dimension uses P3, the long-term unemployment rate—defined as the share of the unemployed who have been jobless for 12 months or longer—sourced from OECD labor force surveys that track duration via household and establishment data. Social inclusion is captured by P4, the percentage of the population living below 50% of the median disposable household income, calculated from income distribution statistics in OECD household surveys adjusted for household size and purchasing power. This threshold reflects relative deprivation in consumption capacity within affluent societies. Data for these indicators are primarily drawn from OECD harmonized datasets, including the Income Distribution Database for P4 and standardized unemployment metrics for P3, enabling cross-country benchmarking while relying on verified national statistics to mitigate reporting biases. This structure underscores HPI-2's focus on opportunity gaps in developed economies, where absolute poverty is rare but inequality in outcomes endures.Calculation and Aggregation Techniques
The Human Poverty Index for developing countries (HPI-1) aggregates three deprivation indicators—probability at birth of not surviving to age 40, the adult illiteracy rate, and the percentage of the population lacking access to an improved water source—using a power mean with exponent 3:\mathrm{HPI-1} = \left[ \frac{1}{3} (P_1^3 + P_2^3 + P_3^3) \right]^{1/3}
where P_1, P_2, and P_3 represent the respective deprivation proportions. This formulation, equivalent to a generalized mean of order 3, amplifies the influence of higher deprivation levels compared to an arithmetic mean (p=1), thereby increasing sensitivity to extreme shortfalls in any dimension and reducing the scope for compensation across them.[10] The cubic transformation penalizes disparities in suffering, as values exceeding 0.5 contribute disproportionately to the index value, aligning with a focus on the most deprived rather than average performance.[9] For selected high-income OECD countries (HPI-2), the aggregation first applies the same power mean to three indicators—probability at birth of not surviving to age 60, the percentage of adults lacking functional literacy skills, and the rate of long-term unemployment (over 12 months)—yielding a sub-index, which is then arithmetically averaged with the fourth indicator, the percentage of the population below the poverty line (defined as 50% of median income):
\mathrm{HPI-2} = \left[ \frac{1}{3} (P_1^3 + P_2^3 + P_3^3) \right]^{1/3} + \frac{1}{3} P_4. This hybrid approach maintains nonlinearity for the core human deprivations while incorporating a linear income-based measure, reflecting contextual differences in data availability and deprivation patterns among developed economies.[10] Deprivation indicators for both indices are derived from harmonized cross-country datasets, including UNESCO Institute for Statistics for literacy, WHO/UNICEF Joint Monitoring Programme for water access, and national statistical offices or OECD databases for employment and income metrics, ensuring comparability while imputing missing values via regional averages where necessary. Aggregations were updated annually through the 2009 Human Development Report, with the final HPI values reflecting data as of that year before the index's discontinuation.