Economists like me are often thought to neglect the plight of ordinary people, as if all we cared about was the aggregate economy, especially when an inordinate focus is given to gross domestic product as the yardstick for progress. Yet among the first lessons in basic economics is a discussion on why GDP is not a measure of well-being. The formal study of economics includes both microeconomics and macroeconomics, where the former looks at economic behavior and outcomes at the level of people as consumers and/or producers, and the latter examines these at the level of the overall economy. To use an analogy, microeconomics looks at the trees, while macroeconomics looks at the forest. It cannot be said, then, that economics and economists neglect individual people.
Asking how well the economy is doing, as indicated by how fast total production and incomes (measured by GDP) are growing, is not the same as asking how well people are doing. This is why gross national happiness was conceived as a preferred economic measure, and serious efforts have been made to actually measure it. While this seems next to impossible, other indicators are already in use to tell us much more than GDP can. The most widely used is the United Nations’ Human Development Index on the premise that income alone cannot measure well-being, but human welfare outcomes, most prominently health and education status, also count. HDI, conceived in the late 1980s and now reported yearly for all UN member countries, thus combines a measure of average income (GDP per capita), health (life expectancy), and education (years of schooling) into a composite index between zero and one, as a better measure of progress.
Why is human development so important? For one, the World Bank estimates that human capital accounts for 70 percent of total wealth in the Philippines. But more than seeing humans as mere factors of production, human development, defined as the expansion of human choices and opportunities, is arguably the end goal of development itself.
Iceland, Norway, and Switzerland top the latest world HDI rankings (as of 2023), with very high HDIs of 0.972, 0.970, and 0.970, respectively. The Philippines ranks 117th in a list of 193 countries, tied with Kyrgyzstan and Jamaica, with an HDI of 0.720. Interestingly, poorer countries (those with lower average incomes) outrank us in HDI, such as Tonga (92nd), Cuba (97th), and Jordan (100th). In Asean, we are behind our neighbors, except for Laos, Cambodia, and Myanmar, with Singapore way up, tied at 13th with the United Kingdom, while Malaysia is 67th. Both fall under the “very high human development” group, while we managed to make it into (near the bottom of) the “high human development” category.
Countries now also measure HDI across their own states or provinces, to show disparities within a country. This effort was spearheaded in the Philippines in the early 1990s by a group of scholars and development practitioners led by Prof. Solita Monsod. The Philippine Human Development Network she started, has so far produced eight Philippine Human Development Reports (PHDR), with the last one in 2021, reporting provincial HDIs based on 2015 data. With HDN’s push, the Philippine Statistics Authority has adopted the HDI as a designated statistic, which means that the data needed to assess it are now systematically compiled, summarized, and published for use by the government and the private sector in evidence-based analyses.
The latest available provincial HDIs (for 2019) showed 16 of our provinces doing better than the overall country performance of 0.718, then topped by Benguet with 0.88, Metro Manila (0.85), Ilocos Norte and Rizal (both 0.82), and Iloilo (0.80). All five fell under “very high human development.” Benguet’s HDI compares to that of Poland, Latvia, Lithuania, and Croatia in 2023, while Metro Manila is comparable to Hungary, Argentina, and Kuwait. Ten other provinces did better than the overall country, including Batanes, Laguna, Cebu, and even the island province of Siquijor. At the other extreme, with the lowest HDI were Tawi-Tawi, Maguindanao, and Eastern Samar.
The HDN now welcomes new members from among human development practitioners and scholars, as it works toward the production of the ninth PHDR targeted for release at the end of this year. Like the eight volumes before it, the report will feature, apart from the latest provincial HDIs, background papers expounding on the volume’s defined theme: provinces as drivers of progress in human development. The new volume will delve into the practice of province-led development in the realms of food security and nutrition, health, education and learning, local economic development, and crosscutting issues like the climate crisis and the local data ecosystem. Send me an email if you’d like to be part of it and be counted as a member of the network.
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