There are two separate formulas for calculating the HPI. One formula measures the poverty index in developing countries. The Human Development Reports (HDR) website summarizes the first formula as a composite index measuring deprivations in the three basic dimensions captured in the HDI — a long and healthy life, knowledge and a decent standard of living (HDR 2009). This first formula, called HPI-1, is calculated using three factors:
- Probability at birth of not surviving to age 40.
- Adult literacy rate.
- Unweighted average of population without sustainable access to an improved water source and children underweight for age.
- Probability at birth of not surviving to age 60.
- Adults lacking functional literacy skills.
- Population below income poverty line (50% of median adjusted household disposable income).
- Rate of long-term unemployment (lasting 12 months or more).
As already discussed, one of the factors that measures a country's HPI is the probability of the population not reaching a certain age. The graph below illustrates the formula, HPI-2, examining selected OECDs and their corresponding death mortality for people reaching the age of 60.Another factor looking at the HPI of the OECDs is long-term unemployment. This demographic contains far greater discrepancies, with some countries (including the USA having the world's lowest at 0.4%) while other countries like Germany and Belgium having far greater unemployment figures. The graph below lists the same 20 OECD countries as the one above. Yet another factor calculated into a country's HPI is the percentage of the population below 50% of the median GDP per capita income. This is also a measure of economic inequality within a country. As shown on the graph below, the USA has the highest percentage of people living in poverty (as characterized by making less than 50% of median income). This poverty measurement is not a universal formula, however. The US defines the poverty threshold at a household's monthly food expenditures times three. Using this formula, the poverty level in this country is less than the 17% figure listed below; current estimates have the poverty rate at 13.2% - though this 11-year high is attributed mainly to the recession. (Homan & Dorning, 2009).The graph listed below combines the four factors that are in the HPI-2 formula for selected OECD countries. Click to enlarge
Homan, T.R., & Dorning M. (2009, September 10). U.S. Poverty Rate Rises to 11-Year High as Recession Takes Toll. Bloomberg News. Retrieved December 13, 2009, from http://www.bloomberg.com/apps/news?pid=20601087&sid=aDIvtqxX.pxY
“Human Poverty Index”. (2009, December 8). Wikipedia. Retrieved December 13, 2009, from http://en.wikipedia.org/wiki/Human_Poverty_Index
Human Development Report 2009. United Nations Development Programme. 2009. Retrieved from http://hdr.undp.org/en/media/HDR_2009_EN_Complete.pdf