In the calculation of Human Development Index HDI why is the maximum GNI per capita fixed at 75 000 ...........

Economic Affairs Others

Download Solution PDF

In the calculation of Human Development Index (HDI), why is the maximum GNI per capita fixed at $75,000?

No nation has ever recorded a GNI per capita higher than this.
A very high income will distort HDI figures and may not add to further development of population.

Which of the above is/are correct?

1 only

2 only

Both 1 and 2

None

छोटे Courses बड़े Results

Master Others

Prepare through Micro-courses

Try Now

Explanation:

Statement 1: Currently we have only 4 countries with GNI pc above the cap – Liechtenstein, Kuwait, Qatar and Singapore.

Statement 2: Income is instrumental to human development, but the contribution diminishes as incomes rise. Also, a high income without being translated into other human development outcomes is of less relevance for human development. Fixing the maximum income means that for countries with GNI per capita greater than $75,000, only the first $75,000 contributes to human development. In this way, the higher income is prevented from dominating the HDI value.