Quality of Life Index
Economic development refers to the quantitative and qualitative changes in the economy. It is a multi-dimensional process. It involves changes in multiple areas, including development of human capital, infrastructure, environmental sustainability, social inclusion, health, literacy and other initiatives. Main parameters of economic development are classified into two categories:
Quality of life.
Income based parameters mainly consists of per capita income index while, quality of life index comprises physical quality of life index and human development index.
Per capita income index is a measure of a country’s economic size. If population growth exceeds the growth rate of national income, the per capita income will fall and the average standard of living may deteriorate. As per World Development Report 2006, countries are classified into rich, middle and low income countries on the basis of per capita income. The limitations of per capita income Index are:
It does not consider composition of output.
Distribution of income is ignored.
It does not address the issue of poverty.
It ignores social, human and institutional aspects.
It possesses problems in international comparison, etc.
To overcome the shortcomings of Per Capita GNP Index, many economists and intellectual policymakers proposed to evolve a composite indicator that could measure development in terms of the quality of life.
The quality of life depends on many things, such as: basic necessities of life, i.e.
Health Care, etc.
By taking some of the indicators of quality of life, a composite index is formed, which is called the “Quality of Life Index”, which is considered the composite indicator of development. Two of such composite indicators of development are: Physical Quality of Life Index (PQLI) and Human Development Index (HDI). The Physical Quality of Life Index (PQLI) takes into account three indicators of quality of life; namely:
Infant mortality and
PQLI is constructed by taking a simple average of the three indicators. The merits of PQLI are:
It is simple to construct and comprehend.
It concentrates on the results rather than determinants of development.
The demerits of PQLI are:
It emphasizes on only three indicators of quality of life, viz. life expectancy, infant mortality and literacy.
It gives equal weight to all the indicators.
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Consider the following statements and identify the Wrong one.Marks:1
Per capita income focuses on distribution of income that accompanies increase in income.
Per capita income does not focus on distribution of income that accompanies increase in income. Per capita income may increases because of the increase in income of a handful rich people, while the majority of population may remain poor.
Per capita income does not consider issue relate to _______.Marks:1
All of the above
Per capita income is not an adequate measure of development because it does not consider various issues related to social, human and institutional dimensions of the country. Thus it is not considered as a perfect index of economic development.
Services of ___________ is not included in national income.Marks:1
Services of housewife in their own homes such as cooking, looking after the household, taking care of children, etc. is not included in national income as no payment is made for such services. National income largely includes those goods and services for which payment is made in money form.
Complete the following sentence.
From the view point of development and economic welfare what is important is not only more output but also what is the _____________.Marks:1
Composition of output
From the view point of development and economic welfare what is important is not only more output but also what is the composition of output. For example if increase in output results in increase in production of non-civilian goods it will not be considered as index of economic development and economic welfare.
Identify the limitation of per capita income index among the following given options.Marks:1
It ignores cost elements like depletion of natural resources
Per capita income index ignores cost elements like depletion of natural resources. For example; in order to raise output and income, natural resources may have been ruthlessly exploited or labourers might have to work harder in unhygienic environment.