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The HDI 2010: new controversies, old critiques

• Published: 24 May 2011
• Volume 9 , pages 249–288, ( 2011 )

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• Jeni Klugman 1 ,
• Francisco Rodríguez 1 &
• Hyung-Jin Choi 1  

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Since its introduction in the first Human Development Report in 1990, the Human Development Index (HDI) has attracted great interest in policy and academic circles, as well as in the media and national audiences around the world. Its popularity can be attributed to the simplicity of its characterization of development - an average of achievements in health, education and income – and to its underlying message that development is much more than economic growth. The index was originally conceived by the late Pakistani economist Mahbub ul Haq, in collaboration with Amartya Sen and other scholars, as a response to their dissatisfaction with GDP as the standard measure of development. As Haq noted, “Any measure that values a gun several hundred times more than a bottle of milk is bound to raise serious questions about its relevance for human progress.” Yet the HDI’s very simplicity prompted critiques from the start, with some contending that it was too simplistic, while others who accepted its self-imposed limitations still questioned its choice of indicators and its computational methodology. This article discusses the concept and key insights learnt from the HDI, provides a detailed review of key critiques of the HDI, today and in the past, and explains the recent changes introduced to the HDI formula and indicators. Recent controversies are highlighted and placed in the context of longer running debates. The innovations to broaden the measurement of deprivations and disparities in human development are introduced, with some key global and regional insights.

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Klugman, J., Rodríguez, F. & Choi, HJ. The HDI 2010: new controversies, old critiques. J Econ Inequal 9 , 249–288 (2011). https://doi.org/10.1007/s10888-011-9178-z

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Received : 01 March 2011

Accepted : 10 April 2011

Published : 24 May 2011

Issue Date : June 2011

DOI : https://doi.org/10.1007/s10888-011-9178-z

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Human Development: Definitions, Critiques, and Related Concepts

2000, SSRN Electronic Journal

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Andreita Cevallos Ortiz

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The origin and evolution of the idea of human development has not been an easy way to go. It took decades to shape the concept. Contributions of philosophers, lawyers, economists and international organizations were key to this job. Its recognition as a fundamental right began to take place particularly by the mid-1980s due to UN’s Declaration on the Right to Development. From then on, human development is present in almost every UN document, mainly in UNDP’s Annual Reports. Besides, several nations have included the right to development in their constitutions. Thus, human development has been acquiring a technical and normative content which must be studied not only from the global perspective of human rights, but from the one of the obligations of the States, as well.The aim of these chapters is to review the origin, evolution, regulation and case law regarding human development as a human right.

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In spite of the fact that the idea of development has been a central feature of human thought for millennia, the concept of development is still being improved upon owing to its complexity. Prior to the 1990s, the concept was poorly conceived and narrowly defined in terms of economic growth or increasing income using GNP as the yardstick for measuring the progress of nations. This approach was not a very good way of thinking about development because it was not concerned with advancing human well-being and human freedom. Human development came as an alternative development paradigm. This paper explores the emergence, meaning and aspects of human development as a development paradigm as well as its measurement with reference to the Human Development Index and its various modifications. The concepts of capabilities and freedom are discussed and the paper concludes that education or being knowledgeable and skill acquisition constitute the foundations for building all other capabilities by which human choices are enlarged and human well-being, enhanced.

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Maize Price Shocks, Food Expenditure and the Mediating Role of Access to Market in Ghana

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The existing empirical literature on the impact of food price shocks on food consumption has primarily concentrated on market-purchased foods, offering limited insights into home-produced foods and food quality. Addressing this gap, our study employs panel data from Ghana to investigate the relationship between exposure to positive maize price shocks and price variability and household consumption patterns of nutrient-dense and less nutrient-dense diets, considering both market purchases and home production. Our findings indicate that maize price shocks lead to a reduction in households' consumption of purchased nutrient-dense and less nutrient-dense food groups, while increasing the consumption of home-produced nutrient-dense food groups. The effects of maize price shocks on diet consumption vary across household types, primary crop cultivation, and wealth status. Additionally, access to markets emerges as a crucial mechanism through which maize price shocks influence households' consumption of nutrient-dense and less nutrient-dense diets. The implications of our study underscore the significance of enhanced market access and policy interventions aimed at mitigating food price increases to improve food nutrition security.

 maize price shocks; food consumption; nutrient-dense diets; market access; Ghana

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Including an exceptionally warm Northern Hemisphere (NH) summer 1 ,2 , 2023 has been reported as the hottest year on record 3-5 . Contextualizing recent anthropogenic warming against past natural variability is nontrivial, however, because the sparse 19 th century meteorological records tend to be too warm 6 . Here, we combine observed and reconstructed June-August (JJA) surface air temperatures to show that 2023 was the warmest NH extra-tropical summer over the past 2000 years exceeding the 95% confidence range of natural climate variability by more than half a degree Celsius. Comparison of the 2023 JJA warming against the coldest reconstructed summer in 536 CE reveals a maximum range of pre-Anthropocene-to-2023 temperatures of 3.93°C. Although 2023 is consistent with a greenhouse gases-induced warming trend 7 that is amplified by an unfolding El Niño event 8 , this extreme emphasizes the urgency to implement international agreements for carbon emission reduction.

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Department of Geography, Johannes Gutenberg University, Mainz, Germany

Jan Esper & Max Torbenson

Global Change Research Institute of the Czech Academy of Sciences, Brno, Czech Republic

Jan Esper & Ulf Büntgen

Department of Geography, University of Cambridge, Cambridge, United Kingdom

Ulf Büntgen

Department of Geography, Masaryk University, Brno, Czech Republic

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Esper, J., Torbenson, M. & Büntgen, U. 2023 summer warmth unparalleled over the past 2,000 years. Nature (2024). https://doi.org/10.1038/s41586-024-07512-y

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DOI : https://doi.org/10.1038/s41586-024-07512-y

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Are Markups Driving the Ups and Downs of Inflation?

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FRBSF Economic Letter 2024-12 | May 13, 2024

How much impact have price markups for goods and services had on the recent surge and the subsequent decline of inflation? Since 2021, markups have risen substantially in a few industries such as motor vehicles and petroleum. However, aggregate markups—which are more relevant for overall inflation—have generally remained flat, in line with previous economic recoveries over the past three decades. These patterns suggest that markup fluctuations have not been a main driver of the ups and downs of inflation during the post-pandemic recovery.

In the recovery from the pandemic, U.S. inflation surged to a peak of over 7% in June 2022 and has since declined to 2.7% in March 2024, as measured by the 12-month change in the personal consumption expenditures (PCE) price index. What factors have been driving the ups and downs of inflation? Production costs are traditionally considered a main contributor, particularly costs stemming from fluctuations in demand for and supply of goods and services. As demand for their products rises, companies need to hire more workers and buy more intermediate goods, pushing up production costs. Supply chain disruptions can also push up the cost of production. Firms may pass on all or part of the cost increases to consumers by raising prices. Thus, an important theoretical linkage runs from cost increases to inflation. Likewise, decreases in costs should lead to disinflation.

Labor costs are an important factor of production costs and are often useful for gauging inflationary pressures. However, during the post-pandemic surge in inflation, nominal wages rose more slowly than prices, such that real labor costs were falling until early 2023. By contrast, disruptions to global supply chains pushed up intermediate goods costs, contributing to the surge in inflation (see, for example, Liu and Nguyen 2023). However, supply chains have more direct impacts on goods inflation than on services inflation, which also rose substantially.

In this Economic Letter , we consider another factor that might drive inflation fluctuations: changes in firms’ pricing power and markups. An increase in pricing power would be reflected in price-cost markups, leading to higher inflation; likewise, a decline in pricing power and markups could alleviate inflation pressures. We use industry-level measures of markups to trace their evolving impact on inflation during the current expansion. We find that markups rose substantially in some sectors, such as the motor vehicles industry. However, the aggregate markup across all sectors of the economy, which is more relevant for inflation, has stayed essentially flat during the post-pandemic recovery. This is broadly in line with patterns during previous business cycle recoveries. Overall, our analysis suggests that fluctuations in markups were not a main driver of the post-pandemic surge in inflation, nor of the recent disinflation that started in mid-2022.

Potential drivers of inflation: Production costs and markups

To support households and businesses during the pandemic, the Federal Reserve lowered the federal funds rate target to essentially zero, and the federal government provided large fiscal transfers and increased unemployment benefits. These policies boosted demand for goods and services, especially as the economy recovered from the depth of the pandemic.

The increase in overall demand, combined with supply shortages, boosted the costs of production, contributing to the surge in inflation during the post-pandemic recovery. Although labor costs account for a large part of firms’ total production costs, real labor costs were falling between early 2021 and mid-2022 such that the increases in prices outpaced those in nominal wages. This makes it unlikely that labor costs were driving the surge in inflation.

Instead, we focus on another potential alternative driver of inflation that resulted from firms’ ability to adjust prices, known as pricing power. As demand for goods surged early in the post-pandemic recovery, companies may have had a greater ability to raise their prices above their production costs, a gap known as markups. Following a sharp drop in spending at the height of the pandemic, people may have become eager to resume normal spending patterns and hence more tolerant to price increases than in the past. In fact, growth of nonfinancial corporate profits accelerated in the early part of the recovery (see Figure 1), suggesting that companies had increased pricing power. Some studies have pointed to the strong growth in nonfinancial corporate profits in 2021 as evidence that increased markups have contributed to inflation (see, for example, Weber and Wasmer 2023). However, the figure also shows that growth in corporate profits is typically volatile. Corporate profits tend to rise in the early stages of economic recoveries. Data for the current recovery show that the increase in corporate profits is not particularly pronounced compared with previous recoveries.

Figure 1 Profit growth for nonfinancial businesses

More importantly, corporate profits are an imperfect measure of a firm’s pricing power because several other factors can drive changes in profitability. For instance, much of the recent rise in corporate profits can be attributed to lower business taxes and higher subsidies from pandemic-related government support, as well as lower net interest payments due to monetary policy accommodation (Pallazzo 2023).

Instead of relying on profits as a measure of pricing power, we construct direct measures of markups based on standard economic models. Theory suggests that companies set prices as a markup over variable production costs, and that markup can be inferred from the share of a firm’s revenue spent on a given variable production factor, such as labor or intermediate goods. Over the period of data we use, we assume that the specific proportion of a company’s production costs going toward inputs does not change. If the share of a firm’s revenue used for inputs falls, it would imply a rise in the firm’s price-cost margin or markup. In our main analysis, we use industry-level data from the Bureau of Economic Analysis (BEA) to compute markups based on the share of revenue spent on intermediate inputs. Our results are similar if we instead use the share of revenue going toward labor costs.

We compare the evolution of markups to that of prices, as measured by the PCE price index, since the recovery from the pandemic. In constructing this price index, the BEA takes into account changes in product characteristics (for instance, size) that could otherwise bias the inflation measure by comparing the prices of inherently different products over time. Similarly, based upon standard economic theory, our markup measure implicitly captures changes in those characteristics (see, for example, Aghion et al. 2023).

The post-pandemic evolution of markups

We examine the evolution of markups in each industry since the third quarter of 2020, the start of the post-pandemic recovery. Figure 2 shows that some sectors, such as the motor vehicles and petroleum industries, experienced large cumulative increases in markups during the recovery. Markups also rose substantially in general merchandise, such as department stores, and for other services, such as repair and maintenance, personal care, and laundry services. Since the start of the expansion, markups in those industries rose by over 10%—comparable in size to the cumulative increases over the same period in the core PCE price index, which excludes volatile food and energy components. However, the surge in inflation through June 2022 was broad based, with prices also rising substantially outside of these sectors. Thus, understanding the importance of markups for driving inflation requires a macroeconomic perspective that examines the evolution of aggregate markups across all sectors of the economy.

Figure 2 Cumulative changes in markups for salient industries

The role of aggregate markups in the economy

To assess how much markup changes contribute to movements in inflation more broadly, we use our industry-level measurements to calculate an aggregate markup at the macroeconomic level. We aggregate the cumulative changes in industry markups, applying two different weighting methods, as displayed in Figure 3. In the first method (green line), we match our industry categories to the spending categories in the core PCE price index for ease of comparison; we then use the PCE weights for each category to compute the aggregate markup. Alternatively, we use each industry’s cost weights to compute the aggregate markup (blue line). Regardless of the weighting method, Figure 3 shows that aggregate markups have stayed essentially flat since the start of the recovery, while the core PCE price index (gray line) rose by more than 10%. Thus, changes in markups are not likely to be the main driver of inflation during the recovery, which aligns with results from Glover, Mustre-del-Río, and von Ende-Becker (2023) and Hornstein (2023) using different methodologies or data. Markups also have not played much of a role in the slowing of inflation since the summer of 2022.

Figure 3 Cumulative changes in aggregate markups and prices

Moreover, the path of aggregate markups over the past three years is not unusual compared with previous recoveries. Figure 4 shows the cumulative changes in aggregate markups since the start of the current recovery (dark blue line), alongside aggregate markups following the 1991 (green line), 2001 (yellow line), and 2008 (light blue line) recessions. Aggregate markups have stayed roughly constant throughout all four recoveries.

Figure 4 Cumulative changes of aggregate markups in recoveries

Firms’ pricing power may change over time, resulting in markup fluctuations. In this Letter , we examine whether increases in markups played an important role during the inflation surge between early 2021 and mid-2022 and if declines in markups have contributed to disinflation since then. Using industry-level data, we show that markups did rise substantially in a few important sectors, such as motor vehicles and petroleum products. However, aggregate markups—the more relevant measure for overall inflation—have stayed essentially flat since the start of the recovery. As such, rising markups have not been a main driver of the recent surge and subsequent decline in inflation during the current recovery.

Aghion, Philippe, Antonin Bergeaud, Timo Boppart, Peter J. Klenow, and Huiyu Li. 2023. “A Theory of Falling Growth and Rising Rents.”  Review of Economic Studies  90(6), pp.2,675-2,702.

Glover, Andrew, José Mustre-del-Río, and Alice von Ende-Becker. 2023. “ How Much Have Record Corporate Profits Contributed to Recent Inflation? ” FRB Kansas City Economic Review 108(1).

Hornstein, Andreas. 2023. “ Profits and Inflation in the Time of Covid .” FRB Richmond Economic Brief 23-38 (November).

Liu, Zheng, and Thuy Lan Nguyen. 2023. “ Global Supply Chain Pressures and U.S. Inflation .” FRBSF Economic Letter 2023-14 (June 20).

Palazzo, Berardino. 2023. “ Corporate Profits in the Aftermath of COVID-19 .” FEDS Notes , Federal Reserve Board of Governors, September 8.

Weber, Isabella M. and Evan Wasner. 2023. “Sellers’ Inflation, Profits and Conflict: Why Can Large Firms Hike Prices in an Emergency?” Review of Keynesian Economics 11(2), pp. 183-213.

Opinions expressed in FRBSF Economic Letter do not necessarily reflect the views of the management of the Federal Reserve Bank of San Francisco or of the Board of Governors of the Federal Reserve System. This publication is edited by Anita Todd and Karen Barnes. Permission to reprint portions of articles or whole articles must be obtained in writing. Please send editorial comments and requests for reprint permission to [email protected]

New research aims to gauge brain power of the T. rex

In December 2022, Vanderbilt University neuroscientist Suzana Herculano-Houzel published a paper that caused an uproar in the dinosaur world.

After analyzing previous research on fossilized dinosaur brain cavities and the neuron counts of birds and other related living animals, Herculano-Houzel extrapolated that the fearsome Tyrannosaurus rex may have had more than 3 billion neurons — more than a baboon.

As a result, she argued, the predators could have been smart enough to make and use tools and to form social cultures akin to those seen in present-day primates.

The original “Jurassic Park” film spooked audiences by imagining velociraptors smart enough to open doors. Herculano-Houzel’s paper described T. rex as essentially wily enough to sharpen their own shivs. The bold claims made headlines, and almost immediately attracted scrutiny and skepticism from paleontologists.

In a paper published Monday in “The Anatomical Record,” an international team of paleontologists, neuroscientists and behavioral scientists argue that Herculano-Houzel’s assumptions about brain cavity size and corresponding neuron counts were off-base.

True T. rex intelligence, the scientists say, was probably much closer to that of modern-day crocodiles than primates — a perfectly respectable amount of smarts for a therapod to have.

“What needs to be emphasized is that reptiles are certainly not as dim-witted as is commonly believed,” said Kai Caspar, a biologist at Heinrich Heine University Düsseldorf and co-author of the paper. “So whereas there is no reason to assume that T. rex had primate-like habits, it was certainly a behaviorally sophisticated animal.”

Brain tissue doesn’t fossilize, and so researchers examine the shape and size of the brain cavity in fossilized dinosaur skulls to deduce what their brains may have been like.

In their analysis, the authors took issue with Herculano-Houzel’s assumption that dinosaur brains filled their skull cavities in a proportion similar to bird brains. Herculano-Houzel’s analysis posited that T. rex brains occupied most of their brain cavity, analogous to that of the modern-day ostrich.

But dinosaur brain cases more closely resemble those of modern-day reptiles like crocodiles, Caspar said. For animals like crocodiles, brain matter occupies only 30% to 50% of the brain cavity. Though brain size isn’t a perfect predictor of neuron numbers, a much smaller organ would have far fewer than the 3 billion neurons Herculano-Houzel projected.

“T. rex does come out as the biggest-brained big dinosaur we studied, and the biggest one not closely related to modern birds, but we couldn’t find the 2 to 3 billion neurons she found, even under our most generous estimates,” said co-author Thomas R. Holtz, Jr., a vertebrate paleontologist at University of Maryland, College Park.

What’s more, the research team argued, neuron counts aren’t an ideal indicator of an animal’s intelligence.

Giraffes have roughly the same number of neurons that crows and baboons have, Holtz pointed out, but they don’t use tools or display complex social behavior in the way those species do.

“Obviously in broad strokes you need more neurons to create more thoughts and memories and to solve problems,” Holtz said, but the sheer number of neurons an animal has can’t tell us how the animal will use them.

“Neuronal counts really are comparable to the storage capacity and active memory on your laptop, but cognition and behavior is more like the operating system,” he said. “Not all animal brains are running the same software.”

Based on CT scan reconstructions, the T. rex brain was probably “ a long tube that has very little in terms of the cortical expansion that you see in a primate or a modern bird,” said paleontologist Luis Chiappe, director of the Dinosaur Institute at the Natural History Museum of Los Angeles County.

“The argument that a T. Rex would have been as intelligent as a primate — no. That makes no sense to me,” said Chiappe, who was not involved in the study.

Like many paleontologists, Chiappe and his colleagues at the Dinosaur Institute were skeptical of Herculano-Houzel’s original conclusions. The new paper is more consistent with previous understandings of dinosaur anatomy and intelligence, he said.

“I am delighted to see that my simple study using solid data published by paleontologists opened the way for new studies,” Herculano-Houzel said in an email. “Readers should analyze the evidence and draw their own conclusions. That’s what science is about!”

When thinking about the inner life of T. rex, the most important takeaway is that reptilian intelligence is in fact more sophisticated than our species often assumes, scientists said.

“These animals engage in play, are capable of being trained, and even show excitement when they see their owners,” Holtz said. “What we found doesn’t mean that T. rex was a mindless automaton; but neither was it going to organize a Triceratops rodeo or pass down stories of the duckbill that was THAT BIG but got away.”

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