Multidimensional Human Opportunity Index

My paper, co-authored with my colleague Shabana Mitra (Indian Institute of Management-Bangalore) was recently accepted for publication at the journal "Social Indicators Research." The paper, titled Multidimensional Human Opportunity Index, is an extension of the Human Opportunity Index (HOI) developed by the World Bank.

The explanation of the HOI is presented in my earlier blog post. In a nutshell, the HOI first measures the probability of access the children of a country have to a certain basic economic service (such as schooling, clean water, etc.). Let this be M. In the next step, the measure creates bins based on certain characteristics of children that are beyond their control, like their gender, family economic condition, residence, gender of head of household, and other socio-economic factors. In the next step, the probability of access to that service by children in each bin is calculated. The probability of those bins that are below M  are selected (if each bin is x, then p(x) is the probability of access for bin x) and the value of HOI is said to be the following:

HOI = M - E(M - p(x) | x is a bin that has access lower than M)

where E(M - p(x) | x is a bin that has access lower than M) is the average of the difference between M and p(x).

In our paper, Multidimensional Human Opportunity Index (MHOI), we note that a child needs a bundle of basic services for proper growth and development. Besides access to clean water, a child needs access to school, access to healthcare, access to electricity and access to good transportation facilities (this list is not exhaustive). If one of them is absent, it can hinder the proper development of the child. For example, school access would not be of much value if the child is sick and does not have a good healthcare facility nearby, or if the child does not have access to clean water. So, instead of looking at the basic services piecemeal, we create a bundle of basic services that are deemed essential to a child. We then measure the probability of access a child has to that bundle of basic services, and then use the similar method to calculate HOI to calculate MHOI. A higher value of MHOI indicates that across the country, there is a more equal distribution of the bundle of services deemed essential for the development of a child.

We use data from Nepal and Bhutan to show how to apply our data to measure MHOI. We find that only about two-thirds of households in Bhutan and one-half of households in Nepal have access to the bundle of basic services that are essential to the development of a child in 2011; although we do find that the MHOI indicator has been improving in both Nepal and Bhutan for the past 10 years. The MHOI of Bhutan is much higher than that of Nepal, but Nepal is catching up.

Such indices can help us evaluate the overall effectiveness of provision of basic services to the population. It can help countries measure whether they are in path to achieving the Sustainable Development Goals of the UN.