The calculation of the HDI now is “geometric” rather than “arithmetic” and the goalposts have changed while – what does that mean?
Previously, the HDI had a form of the arithmetic mean of dimension indices obtained from the corresponding indicators by normalization using the fixed minima and maxima. The normalisation refers to the transformation of indicators expressed in different units to the unit-less quantities taking values between 0 and 1. This year’s HDI has a form of geometric mean of dimension indices obtained from the indicators by normalization based on minima and maxima observed over the period for which the HDI has been computed and reported. Thus, the previous ‘cap’ on the income component has been replaced in the 2010 HDI by an ‘observed maximum’ per capita income level. Adopting the geometric mean produces lower index values, with the largest changes occurring in countries with uneven development across dimensions. The geometric mean has only a moderate impact on HDI rankings.
