Human development is defined as the process of enlarging people’s freedoms and opportunities and improving their well-being. Human development is about the real freedom ordinary people have to decide who to be, what to do, and how to live.

The human development concept was developed by economist Mahbub ul Haq. At the World Bank in the 1970s, and later as minister of finance in his own country, Pakistan, Dr. Haq argued that existing measures of human progress failed to account for the true purpose of development—to improve people’s lives. In particular, he believed that the commonly used measure of Gross Domestic Product failed to adequately measure well-being. Working with Nobel Laureate Amartya Sen and other gifted economists, in 1990 Dr. Haq published the first Human Development Report, which was commissioned by the United Nations Development Programme.

Central to the human development approach is the concept of capabilities. Capabilities—what people can do and what they can become-are the equipment one has to pursue a life of value. Basic capabilities valued by virtually everyone include: good health, access to knowledge, and a decent material standard of living. Other capabilities central to a fulfilling life could include the ability to participate in the decisions that affect one’s life, to have control over one’s living environment, to enjoy freedom from violence, to have societal respect, and to relax and have fun.

Our capabilities are expanded (or constrained) by our own efforts and by the institutions and conditions of our society. People with extensive, well-developed capabilities have the tools they need to make their vision of “a good life” a reality. Those poor in capabilities are less able to chart their own course and to seize opportunities. Without basic capabilities, human potential remains unfulfilled.
The capability approach is a normative framework used for analyzing well-being, often employed to understand development problems. Although certain aspects of the approach can be linked to Aristotle and Adam Smith, it is philosopher-economist Amartya Sen and more recently, University of Chicago professor of law and ethics Martha Nussbaum, who are responsible for its development and proliferation. The core premise of the capability approach is that well-being should be defined by people’s real and actual opportunities to undertake the pursuits that they desire (often referred to as ‘capabilities to function’) – and through these freedoms, be whom they would like to be. One illustration of the difference between capabilities to function and formal freedoms is found in the area of educational opportunity. All US citizens have the formal freedom to earn a college degree. However when comparing students from low-income neighborhoods with more affluent students, low-income students’ real freedoms to attend college can be constrained by, among other things, low quality local high schools and financial considerations. Formal freedoms, in this and many cases, are necessary but not sufficient to provide true capabilities to function.The capability approach to well-being, which prioritizes the ability to actualize opportunity into ‘beings and doings’, contrasts with other theories of well-being which focus on subjective measures, such as happiness, or on material means, such as income.

The Human Development Index

The state of the nation is often expressed through GDP (Gross Domestic Product), daily stock market results, consumer spending levels, and national debt figures. But these numbers provide only a partial view of how people are faring.

The Human Development Index was developed as an alternative to simple money metrics. It is an easy-to-understand numerical measure made up of what most people believe are the very basic ingredients of human well-being: health, education, and income. The first Human Development Index was presented in 1990. It has been an annual feature of every Human Development Report since, ranking virtually every country in the world from number one (currently Iceland) to number 177 (currently Sierra Leone).

This composite index has become one of the most widely used indices of well-being around the world and has succeeded in broadening the measurement and discussion of well-being beyond the important, but nevertheless narrow, confines of income. In a number of countries, the Human Development Index is now an official government statistic; its annual publication inaugurates serious political discussion and renewed efforts, nationally and regionally, to improve lives.

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The American Human Development Index

The Measure of America presents a modified American Human Development Index. The American HD Index measures the same three basic dimensions as the standard HD Index, but it uses different indicators to better reflect the U.S. context and to maximize use of available data. For example, while the standard index measures access to knowledge using the average number of years that students spend in school, we have chosen instead to use educational attainment, a more demanding indicator.