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Inequality-adjusted Sustainable Human Development Index

Author: LiYu
Tutor: DingRenZhong
School: Southwestern University of Finance and Economics
Course: Regional Economics
Keywords: Human Development Index Inequality Adjustment Sustainable Adjustment China Income Education Health Environment
CLC: F061.3
Type: Master's thesis
Year: 2013
Downloads: 24
Quote: 0
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Any achievement has been made by human beings should be ultimately reflected to individuals, while the evaluation of "development" in reality usually focuses on one single aspect, such as economic growth, obviously, human development is not decided by the progress in one area, but by the comprehensive influence from multi-dimensional and wide-ranging contributions. It was a great attempt to propose the Human Development Index (HDI), which successfully showed the influence to human development from three main dimensions:income, education and health. However, there is always something to be further improved for any new things, and HDI is also not an exception.It is understandable that HDI defines income, education and health as the three main dimensions of human development, which is the start point and basis for the analysis, while it will inevitably come to a misleading conclusion if we just only consider the mean value of income, education and health and ignore the distribution of these three aspects respectively at the same time, that two countries will have the same level of human development because they have the same income per capita, although the distribution of income is various different between them. This wrong conclusion is still valid in education and health, and the resulting policy will be catastrophic, since there were nearly no countries long-term stable with huge internal income disparities. In addition, as one of the three basic aspects of HDI, income doesn’t cover the price to pay to obtain this economic achievement, such as environmental pollution and ecological destruction, which seems to make another misleading conclusion that two countries with the same level of income will get the same level of human development, although the levels of environmental pollution of them are far from the same. It is very hard for us to imagine this will obviously set up, unless the human beings are really immune to the growing pollution. According to the negligence of the distribution of the three dimensions and environmental pollution in the progress of human development, this paper will try to make some tentative improvements.It is helpful for us to get a clear understanding of HDI itself by discussing in detail on its generation, connotation, nature, defects and improvement recommendations by some scholars, which is the main content of the second part of this paper. In this section, we also introduced the HDI research in China, which would help us to have an intuitive understanding of the status of HDI in China, and this generalization was the starting point of this study.In the third section, we would introduce the Inequality-adjusted Sustainable Human Development Index (IASHDI) in detail, which was derivative from HDI through making inequality adjustment and sustainable adjustment on it. The adjusting methods would also be fully discoursed, which were commonly used in the current study.The fourth section is the core analysis in this paper. In this section, taking China as the case of our analysis, using Chinese provincial data, we calculated the IASHDI of31provinces in China in the year of1999and2009. After handling these data as reasonable as possible, we took use of all the basic data, such as per capita income, the average years of schooling, expected years of schooling and average life expectancy, calculating the two adjusting indicators including inequality adjustment indicators (Gini coefficient) and sustainable adjustment indicators (environmental behavior index, EBI), this paper calculated the IASHDI of31provinces in China by combining the basic data and the adjusting indicators. After the analysis and comparison between different types of human development index or the same HDI among different periods, this paper concluded that:firstly, the rising inequality would significantly reduce the level of human development, the higher the degree of inequality was, the relative ranking of human development of this province would fall more sharply; secondly, it was necessary to improve the quality of the environment for promoting the sustainable human development, since which would be "punished" by pollution; thirdly, there was an obvious correlation between economic development and inequality, which seemed negative for China in this period.According to the empirical analysis in section four, we proposed five recommendations in the fifth section. Firstly, persist in taking economic construction as the central task for our country and pay more attention to the social and ecological construction, in order to increase the levels of income, education, health and the quality of environment in the whole China, promoting the coordinated development of economy, society and ecology. Secondly, deepen the reform of income distribution mechanism and reduce the income inequality by increasing the income of the poor and strengthening the fiscal transferring from developed areas to the poor areas, from the upper class to the lower class. Thirdly, improve the average years of schooling of vulnerable groups and people in disadvantaged areas to reduce the education inequality by increasing the government funding for the education of them and encouraging more social organizations to support the development of those education. Fourthly, promote the reform of the health system and the social security system, such as the new rural cooperative medical insurance, urban residents medical insurance, pension insurance, social insurance, unemployment insurance, and so on, in order to ensure the poor to have the same right to get the basic health care and social security service, so as to reduce the health inequality. Fifth, strengthen the construction of ecological civilization and the new industrialization by promoting the development of low carbon technology and low carbon economy, enhancing the sustainable development capacity of the natural environment, economy, society and the human beings.Combining the review of the human development index, this paper proposed the inequality-adjusted sustainable human development index, which was to some extent innovative. In addition, using Chinese provincial data, we calculated and analyzed the Chinese provincial IASHDI, which had some practical significance and policy implications. However, due to the difficulties of data availability, it is unconvincing that the way we dealed with the income inequality and health inequality, which is open to questioning. From this aspect, it is also an alternative potential research direction in the future.

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