Inequality-adjusted Human Development Index (IHDI) Reflecting inequality in each dimension of the HDI addresses an objective first stated in the Human Development Report 1990. The 2010 Report introduced the Inequality-adjusted HDI (IHDI), a measure of the level of human development of people in a society that accounts for inequality. Under perfect equality the IHDI is equal to the HDI, but falls below the HDI when inequality rises. In this sense, the IHDI is the actual level of human development (taking into account inequality), while the HDI can be viewed as an index of the potential human development that could be achieved if there is no inequality. The IHDI accounts for inequality in HDI dimensions by “discounting” each dimension s av erage value according to its level of inequality measured by the Atkinson index. We apply this index to 134 countries. Frequently Asked Questions (FAQs) about the Inequality-adjusted HDI (IHDI) What is the Inequality-adjusted HDI (IHDI)? The Inequality-adjusted Human Development Index (IHDI) adjusts the Human Development Index (HDI) for inequality in distribution of each dimension across the population. The IHDI accounts for inequalities in HDI dimensions by “discounting” each dimension s average value according to its level of inequality. The IHDI equals the HDI when there is no inequality across people but is less than the HDI as inequality rises. In this sense, the IHDI is the actual level of human development (accounting for this inequality), while the HDI can be viewed as an index of “potential” human development (or the maximum level of HDI) that could be achieved if there was no inequality. The “loss ” in potential human development due to inequality is given by the difference between the HDI and the IHDI and can be expressed as a percentage. What is the purpose of an Inequality-adjusted HDI (IHDI)? The HDI represents a national average of human development achievements in the three basic dimensions making up the HDI: health, education and income. Like all averages, it conceals disparities in human development across the population within the same country. Two countries with different distributions of achievements can have the same average HDI value. The IHDI takes into account not only the average achievements of a country on health, education and income, but also how those achievements are distributed among its citizens by “discounting” each dimension s average value according to its level of inequality. What are the results of the IHDI regarding HDI achievements globally and regionally? The average world loss in HDI due to inequality is about 23% ranging from 5% (Czech Republic) to 43.5% (Namibia). People in sub-Saharan Africa suffer the largest losses due to inequality in all three dimensions, followed by South Asia and the Arab States. Sub-Saharan Africa suffers the highest inequality in health, while South Asia and Arab States have considerable losses due to unequal distribution in education. Latin America and the Caribbean suffers the largest loss of any region due to inequality in income (39.3%). Which countries and regions are the least equal and which are most equal? Generally countries with less human development also have more multidimensional inequality and thus larger losses in human development due to inequality, while people in developed countries experience the least inequality in human development. The East Asia and the Pacific Region performs well on the IHDI, particularly in access to healthcare and education, and former socialist countries in Europe and Central Asia have relatively egalitarian distributions across all three dimensions. Does the IHDI show if inequality is getting better or worse? Although this is the second year that the IHDI has been calculated, we didn t recalculate the 2010 IHDI from the consistent series as we did for HDI trends. This is mostly because the inequality in education and income for many countries was estimated using the same sources in both years. Future versions of the IHDI will allow for comparisons over time. How is the IHDI measured? The approach is based on a distribution-sensitive class of composite indices proposed by Foster, Lopez-Calva, and Szekely (2005), which draws on the Atkinson (1970) family of inequality measures. It is computed as the geometric mean of dimension indices adjusted for inequality. The inequality in each dimension is estimated by the Atkinson inequality measure, which is based on the assumption that a society has a certain level of aversion to inequality. (For details see Alkire and Foster (2010) and Technical notes 418 KB in HDR 2011) What are the sources of data used for calculating the IHDI? The IHDI relies on data on income/consumption and years of schooling from major publicly available databases, which contain national household surveys harmonized to common international standards: Eurostats EU Survey on Income an