Definition
Composite Indicator
A single measure that combines multiple individual indicators into one index to provide an overall assessment.
- Since economic development is a multi-dimensional framework, using a single indicator to measure it, may not give the best representation of its state.
- Therefore we can use another set of indicators called Composite Indicators. Examples Include:
- Human Development Index (HDI)
- Gender Inequality Index (GII)
- Inequality adjusted Human Development Index (IHDI)
- Happy Planet Index
- Therefore we can use another set of indicators called Composite Indicators. Examples Include:
Human Development Index(HDI)
- HDI is measured using three different factors:
- a long and healthy life measured by life expectancy at birth
- access to knowledge measured by mean years of schooling and expected years of schooling
- a decent standard of living measured by GNI per capita (USS PPP).
- Each of these factors is given a numerical representation from 0 to 1, with 0 indicating the lowest level possible for that extent.
- Eventually the HDI is calculated by finding the average of the three factors mentioned.
- However, HDI is a somewhat limited measure of economic development as it doesn't provide insights about:
- income distribution
- malnutrition
- demographic trends
- unemployment
- inequalities
- political participation
