Human development index (HDI) is a composite measure of human development in three basic dimensions: Health (as measured by life expectancy at birth); Knowledge (as measured by the education index); Income (as measured by gross national income per capita).
HDI’s value ranges from 0 to 1. The nearer the HDI reach to 1, the higher human development is, and vice versa.
To calculate the HDI, the following formula is used:
HDI = (Ihealth × Ieducation × Iincome)1/3
Where:
(1) Ihealth: Index of average life expectancy at birth.
(2) Ieducation: Education index measured as geometric mean of two indices: mean years of schooling and expected years of schooling.
+ Mean years of schooling measured as years of schooling for adults ages 25 and older divided by total population aged 25 and older.
+ Expected years of schooling refer to years that a 5-year-old child will spend with his education in his whole life. It is assumed that possibility of schooling application at any specific age is equal to enrollment rate at that age.
Formular:
: Expected years of schooling ages from a to t;
: Number of people attending school the right age under attend (where i = a, a+1,…,n); n expresses schooling age limit;
: Population at school age in year t. Age of level 1 expresses population in primary education;
Dl : Primary education period
(3) Iincome: Index of GNI per capita (PPP – USD)
The sub–indices are calculated as follows:
Dimension index = Actual value – Minimum value
| Dimension index = | Actual value – Minimum value |
|
Maximum value – Minimum value |
In particular, Iincome is calculated using the folular below:
| Iincome = | ln(real) – ln(min) |
|
ln(max) – ln(min) |
The value Max and Min of relevant indicators, which are used to calculate Vietnam’s HDI, depending on Human Development Report 2013 of UNDP:
| Index | Unit | Max | Min |
|
Average life expectancy at birth |
Year |
83,6 |
20,0 |
|
Mean years of schooling |
Year |
13,3 |
0,0 |
|
Expected years of schooling |
Year |
18,0 |
0,0 |
|
GNI per capita (PPP) |
USD |
87478 |
100 |
Monthly average income per capita is calculated by dividing the total income of household in a reference year by the number of household members and by 12 months. Household income is the total amount of money and in-kind value received by household and household members after deducting production cost in a given period, usually one year.
Monthly average expenditure per capita is measured by dividing the total expenditure of households in reference year by their headcounts on average of 12 months. Household expenditure is the total amount and value in kind (including own accounts produced by households) spent by households and members on consumption in a given period, usually one year.
Poverty rate is the ratio of the number of people or households whose income (or expenditure) per capita fall below the poverty line among total surveyed population and households.
Poverty line refers to the average revenue (or expenditure) per capita used as a standard to evaluate a poor person or a household. Those whose income (or expenditure) beneath the poverty line is considered poor person/household.
- Food poverty line measured as value of a basket of food and foodstuff needed to provide a person with 2100 Kcal a day.
- General poverty line is the sum of food poverty line and minimum expense for non-food, i.e. house, clothes, furniture, studying, recreation, health care, transportation, telecommunication, etc.
Multi-dimensional poverty households are households whose monthly average income per capita is at or below income-based poverty line (welfare poverty line) or whose monthly average income per capita is above income-based poverty line but below minimum living standard and deprives of at least 3 indices for measuring deprivation of access to basic social services. The multi-dimensional poverty line is defined upon two criteria, including income-based criteria and basic-social-service-based criteria as follows:
Income-based criteria:
+ Income-based minimum living standard is the income level that guarantees to afford basic minimum needs for a person to survive, including food, foodstuff demands and non-food consumption suitable with socio-economic situation of the province/city directly under central management in each period.
+ Income-based poverty line (also welfare poverty line) is the income level which household is considered as income poverty if its income is lower than that level.
Criteria for deprivation of accessing to basic social services:
+ 5 basic social services include: Health, Education, Housing, Clean water and sanitation and Information accessibility.
+ 10 indicators for measuring level of deprivation:(1) Adult education; (2) Child school attendance; (3) Accessibility to health care services;(4) Health insurance; (5) Quality of house; (6) Housing area per capita; (7) Drinking water supply; (8) Hygienic toilet/latrine; (9) Use of telecommunication services; (10) Assets for information accessibility.
Index of income inequality distribution (GINI index) measures the extent to which the distribution of income or consumption expenditure among population within an economy deviates from a perfectly equal distribution. GINI index is presented by LORENZ curve. A Lorenz curve plots the cumulative percentages of total income received against the cumulative number of recipients.
GINI index is calculated by:
Of which:
Fi : Cumulative percentage of recipients number i;
Yi : Cumulative percentage of income received by recipient number i.
GINI index of 0 represents perfect equality in the society when every person receives the same income, while an index of 1 implies perfect inequality when a single person receives 100% of the total income. Thus, GINI ranges from 0 to 1. The higher GINI to 1, the more unequal distribution of income happens in the society.
Average income of employed workers in State sector includes income from wages or salary and other earnings similar to wages and salary such as: earming for additional working time, bonus, allowances of employed wokers in State sector.
The average income is the total amount of real income of a worker on an average.
Formula:
| Average income of employed workers in State sector | = | S Wi x Li |
|
S Li |
Of which:
i: Reference period (one month) (i);
Li: Number of employed workers in State Sector at time point;
Wi : Income of each employed worker in one month.