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Indicators of performance an idea whose time has come

An indicator is a piece of information which is particularly important in itself and/or demonstrates larger-scale changes or trends: it sums up a complex picture and gives an accurate overview. For example, GNP per capita the most commonly used indicator of economic development is both important in its own right and demonstrates trends in a national economy. Indicators are use widely in public sector management in the UK, e.g. performance in the NHS is assessed by reference to the appropriate indicator. Some of the controversy linked to the use of indicators as a way of rewarding performance is relevant to the use of indicators in the study of development (see Box 1). For an indicator to be useful in public administration or in academic study, it has to be fit for purpose, selected so that it measures the characteristic that Box 1: Characteristics of a good indicator
Indicators should: 1. be easy to understand, with few complex mathematical adjustments 2. relate to something that is clearly measurable, not a tenuous idea like social capital however important that may be in development unless a clear measure of this can be devised 3. measure something important in its own right or something which closely reflects an important characteristic it should be an indicator rather than just a statistic. The data used should be: 4. readily and inexpensively available it doesnt have to be a new idea 5. timely there should be a short time lag between event and indicator becoming available 6. available for a number of areas, social groups, etc, so that a picture of distribution can be built up; i.e. regional or international comparability is desirable. Target

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SEPTEMBER 2006 528 Alan Marriott

Development Indicators
Figure 1: Millennium Development Goals and associated indicators
Indicator GDP per capita (to measure trend) Undernourished people Primary enrolment rate Ratio of girls to boys in school Under five mortality rate Proportion with access to improved water source Proportion with access to improved sanitation Source World Bank FAO UNESCO UNESCO UNICEF UNICEF and WHO UNICEF and WHO Halve the proportion of people whose income is less than $1 a day Halve the proportion of people who suffer from hunger Children are able to complete primary schooling Gender equality in education Reduce under-five mortality Halve the proportion of people without sustainable access to safe drinking water Halve the proportion of people without sustainable access to improved sanitation

it is intended for. The wide use of GNP per capita for ranking of national economies in the world is entirely appropriate. But sometimes there is confusion, in the media rather than in academic geography, in that total GNP is referred to. Critical commentators sometimes say this is one of the biggest economies in the world but it cant afford to provide for its poor, but this is an error in reasoning: income per capita is the relevant indicator.

or small, densely populated or sparsely populated) Life expectancy at birth Under-five mortality rate Gross national income, both total (not an indicator of development) and per capita PPP gross national income per capita (PPP = purchasing power parity) Energy use per capita.

Millennium Development Goals

In at least one respect, development indicators are being used not just as an aid to study but to assess the effectiveness of policy. This is the case of the Millennium Development Goals, which are to be tested against indicators. The Millennium Development Goals have been accepted by the international community and are UK government policy. The success of the policies will be assessed against the indicators set out in Figure 1.

Most of these indicators will be wellknown to geographers interested in development. GNP per capita is an indicator of income in an economy, hence an indicator of welfare. It is straightforward and easily understood, but note that it provides no information about income distribution within the economy (even or uneven), nor about the balance of public and private expenditure (public or private goods and services, personal or central direction), nor about the choice of luxury or basic goods. Data for GNP per capita for Sub-Saharan Africa, adjusted for purchasing power as most data now are, are given in Figure 2.

Single variable indicators

A very large number of single variable indicators have been used from time to time. The World Bank Atlas lists the following in a table headed Key indicators of development: Total population Population density (these are in fact not indicators of development developed and less developed countries can be large

Combined variable indicators

Single variable indicators have the very real advantage of being simple to use and understand. Inevitably, however, they do offer a onedimensional view of a countrys development. In some circumstances it is helpful to have a more

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September 2006 no.528 Development Indicators Figure 2: Human Development Index and GNP per capita for Sub-Saharan Africa, adjusted for purchasing power
HDI UK (for comparison) South Africa Equatorial Guinea Gabon Namibia Botswana Comoros Ghana Sudan Congo Uganda Zimbabwe Madagascar Swaziland Cameroon Lesotho Dijbouti Mauritania Kenya Gambia Guinea Senegal Nigeria Rwanda Angola Eritrea Benin Ivory Coast Tanzania Malawi Zambia Congo DR Mozambique Burundi Ethiopia Central African Republic Guinea-Bissau Chad Mali Burkino Faso Sierra Leone Niger 0.939 0.658 0.655 0.635 0.627 0.565 0.547 0.520 0.512 0.512 0.508 0.505 0.499 0.498 0.497 0.497 0.495 0.477 0.474 0.470 0.466 0.458 0.453 0.450 0.445 0.444 0.431 0.420 0.418 0.404 0.394 0.385 0.379 0.378 0.367 0.355 0.348 0.341 0.333 0.317 0.298 0.281 GDP per capita (PPP) in US$ 27,147 10,346 19,780 6,397 6,180 8,714 1,714 2,238 1,910 965 1,457 2,443 809 4,726 2,118 2,561 2,086 1,766 1,037 1,859 2,097 1,648 1,050 1,268 2,344 849 1,115 1,476 621 605 877 697 1,117 648 711 1,089 711 1,210 994 1,174 548 835

two educational statistics are converted in the most straightforward way: a range from 0% to 100% is directly converted to the index so that an extra 1% in the proportion of the adult population that is literate gives rise to an extra 1% in the index number. For the expectation of life index, two goalposts are established as maximum and minimum values. It is necessary to choose a maximum value for the indicator if you are aiming for an index with a maximum value. The compilers of the HDI use 85 years. It is not necessary to choose a minimum value since 0 years is built into the data, but no doubt to make the indicator more discriminating, the compilers have chosen 25 years. Within the range 25 to 85 years, extra years of life are directly translated into extra points on the index scale. The situation for the GDP index is more complicated. Maximum and minimum goalposts are defined at $100 and $40,000 but differences in income between those values are not proportionately converted to the GNP index. Instead, the logarithm of the GNP per capita is used. The reasoning here is that extra income does not give the same extra welfare as income rise an extra dollar if incomes are already $40,000 means little, but if incomes are only $100, an extra dollar is worthwhile. We may accept this principle, but the compilers still have to decide how to convert the data. The mechanism they use is to convert to logarithm (remember that the logarithm of 100 is 2, the log of 1000 is 3, 10,000 has a log of 4, and so on). So the logs of GNP per capita are given an index on a scale between 2 (log of 100) and 4.602 (log of 40,000).

representative overview, combining a number of variables in a single indicator. The best known of these is the Human Development Index. This is prepared annually by the UNDP. It brings together data in three dimensions of development: a long and healthy life knowledge a decent standard of living. The statistics on which the indicators used to measure these dimensions are based are: life expectancy at birth the combination of adult literacy rate and gross enrolment ratio GDP per capita in PPP US$. The method is outlined in Figure 3
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and Sub-Saharan Africa data are given in Figure 2. These data are converted to index numbers in three different ways. The Figure 3: Calculation of HDI
Dimension Indicator A long and healthy life Life expectancy at birth

Knowledge

A decent standard of living

Adult literacy rate Gross enrolment GDP per capita rate 100% and 0% Linear 100% and 0% Linear 40,000 and 100 Logarithmic

Maximum and 85 years and minimum values 25 years Formula for conversion to Index Dimension Index Linear

Life expectancy index

Education index (two thirds Adult GDP index literacy, one third Gross enrolment)

September 2006 no.528 Development Indicators Figure 4: Other indices related to the HDI
Index Human Poverty Index for Developing countries Human Poverty Index for selected OECD countries Gender-related Development Index Abbreviation HPI-1 HPI-2 GDI Data used (1) survival to 40 (2) adult literacy (3) access to water (4) underweight children (1) survival to 50 (2) stronger standard for adult literacy (3) population below poverty line (4) unemployment (1) differences in life expectancy (2) differences in adult literacy and enrolments (3) differences in earned income (1) shares of parliamentary seats (2) shares of official, managerial, professional and technical posts (3) differences in earned income

Gender Empowerment Measure GEM

Figure 5. Data for the index on the demographic and social status of females
Sex ratio (females per thousand males) Sex ratio index Child sex Child sex Ratio ratio (0-6 yrs) index (females per thousand males) Adult literacy ratio (ratio of % adult females literate to males as a rate per thousand) 1000 715 875 722 690 779 557 895 673 586 796 858 850 728 711 791 636 580 753 933 876 655 783 767 913 950 863 671 834 840 580 801 784 803 612 717 776 Adult literacy ratio index Combined Index

England & Wales (for comparison) 1,055 India 933 Andaman & Nicobar Is. 846 Andhra Pradesh 978 Arunachal Pradesh 901 Assam 932 Bihar 921 Chandigargh 773 Chatisgarh 990 Dadra & Nagar Haveli 811 Daman & Diu 709 Delhi 821 Goa 960 Gujarat 921 Haryana 861 Himachal Pradesh 970 Jammu & Kashmir 900 Jharkhand 941 Karnataka 964 Kerala 1,058 Lakshadweep 947 Madhya Pradesh 920 Maharashtra 922 Manipur 978 Meghalaya 975 Mizoram 938 Nagaland 909 Orissa 972 Pondicherry 1,001 Punjab 874 Rajasthan 922 Sikkim 875 Tamil Nadu 986 Tripura 950 Uttar Pradesh 898 Uttaranchal 964 West Bengal 934

88.75 58.25 36.5 69.5 50.25 58 55.25 18.25 72.5 27.75 2.25 30.25 65 55.25 40.25 67.5 50 60.25 66 90 61.75 55 55.5 69.5 68.75 59.5 52.25 68 75 43.5 55.5 43.75 71.5 62.5 49.5 66 58.5

953 927 965 964 961 964 938 845 975 973 925 865 933 878 820 897 937 966 949 963 974 929 917 961 975 971 975 950 958 793 909 986 939 975 916 906 963

63.25 56.75 66.25 66 65.25 66 59.5 36.25 68.75 68.25 56.25 41.25 58.25 44.5 30 49.25 59.25 66.5 62.25 65.75 68.5 57.25 54.25 65.25 68.75 67.75 68.75 62.5 64.5 23.25 52.25 71.5 59.75 68.75 54 51.5 65.75

100 42.92 74.95 44.45 38.1 55.79 11.31 78.98 34.6 17.27 59.21 71.68 69.91 45.59 42.11 58.29 27.21 15.93 50.61 86.54 75.12 30.94 56.51 53.33 82.67 89.94 72.55 34.22 66.79 68.06 15.98 60.2 56.81 60.57 22.4 43.46 55.25

82 53 60 61 53 61 44 44 60 41 41 47 64 48 38 57 47 49 60 79 68 49 55 63 73 72 65 56 68 43 42 60 62 64 43 53 60

Discussion
The combination of a number of data sources gives rise to an indicator which is more representative of a range of development considerations
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than a single parameter, but this is achieved at a cost. The problem is that the construction of the index ultimately depends on subjective decisions about which indicators to include and how to manipulate them.

Both the selection of the goalposts and the scaling of the GNP per capita data are arbitrary, although the decisions are no doubt well-informed and carefully considered. The HDI is designed to indicate development

September 2006 no.528 Development Indicators over a range of factors in LEDCs; consider what changes are desirable if a similar measure were to be used to discriminate between MEDCs: The goalposts for the life expectancy at birth indicator would need changing. The maximum value is fine (no country exceeds 85 years) but the minimum value would be too low (no MEDC has a life expectancy below 70). There is so little variation in both the adult literacy and school enrolment indicators that they are not suitable for comparison purposes at all. The differences that do exist are probably more to do with statistical definitions and data collection methods than real differences. The goalposts for GNP per capita would also need consideration. A minimum of $1,000 and a maximum of $70,000 might be better. In view of the concern about lifestyle issues and the environment in developed countries, data dealing with, for example, hours of work and pollution levels, should be included. Both of these indicators would have to be scaled so that high values had a negative impact on the indicator. Figure 6: Index of the demographic and social status of females, states of India

Nepal Bhutan

Bangladesh

Index 64 and over 54 63 44 53 43 and below

Sri Lanka

Other indices
The UNDP also calculates a number of related indices. These are summarised in Figure 4.

Working out an indicator: the demographic and social status of females

So many indictors are available and used that new ones often have very limited applications. But as an example of a new indicator, we will devise one to give an overall view of the status of females in a society. Three indicators are combined: the sex ratio, to indicate the survival rate of females over several decades; the under-7 sex ratio, to indicate the recent survival rate of females; and the level of female adult literacy compared with male. The data are all from the Census of India and the states and territories of India are compared. The sex ratio and child sex ratio data are given maximum and minimum
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values of 700 and 1100, the adult literacy ratio data 500 and 1000. Each of the data is scaled to give three indices. These are then combined not with equal weights but with a greater weight given to child sex ratio, since that is an indicator for the future, as the children grow up, more than the past. The weights chosen were: sex ratio 30%, child sex ratio 40%, and adult literacy ratio 30%. (The calculations are shown in Figure 5.) The results are mapped in Figure 6, and show that females suffer a lower status in the demographically conservative areas of the central north of India. The indicator, which of course can be further refined, brings

together three pieces of information to give a unified overview.

References
Anderson, V. (1991) Alternative economic indicators, Routledge. United Nations Development Programme (2005) Human Development Report 2004, Oxford University Press (see also http://hdr.undp.org/reports/global/ 2005/). World Bank (2004) World Bank Atlas Oxford University Press. Government of India Census of India 2001 (see http://censusindia.net/ results/proindia3.html).

Focus Questions
1. Refer to the data for Sub-Saharan Africa (Figure 2) and identify and discuss differences in the rankings of GNP per capita and the Human Development Index. 2. Discuss the advantages and disadvantages of single variable and combined variable indices.