Human Capital and Quality of Life
The Human Capital Index (HCI) is an international ranking of countries developed by The World Bank and it indicates how much of the potential of a newborn child can be realized when he or she is reaching the age of 18. In a way, the HCI predicts the future’s welfare of the citizens of a country.
The Netherlands is on position 9 of in total 157 countries. That’s quite good. The HCI for The Netherlands is 0,8 which implies that 20% is not used of the full potential. So, there’s still room for improvement. Indonesia is on position 88 and has an HCI of 0,53 which means that 47% can be improved to the full potential.
The Human Capital Index is based upon three components:
- Child survival rate before age 5
- Quality of learning (instead of years of schooling)
- Health based on stunting rates of children at age 5 (the growth length of a child is a good indicator of health) and adult survival rate until age 60
Human Capital Index is a measurement that predicts a country’s future (within 18 years) and gives therefore insights for policies to be developed. This picture shows the HCI of 157 countries: the darker the color, the higher the index.
Quality of Life (QoL) is a measurement that gives an overview of the state of wellbeing per country as is it is now – partly a proof of the policies that were developed in the past. The picture below shows the QoL of 60 countries (the dataset does not have more countries in the dataset for 2018). Also here: the darker the color, the higher the ranking.
As the spread graph below shows, there is a clear correlation between HCI and QoL: both have the same trend.
The vertical axis shows the values of Human Capital Index and Quality of Life where the last index is normalized (divided by the max QoL) to fit the two in one graph. The horizonal axis contains the country in the HCI ranking: no 1. on the left and no. 157 on the right.
Although correlated, the spread seems to be substantial. The HCI top 10 gives a bit more insight:
There are only 4 countries that rank with both indices in the top 10: Finland, Australia, Sweden and The Netherlands. It is also remarkable that 3 of the 4 top HCI countries have quite a substantial lower QoL: Singapore, South Korea (Korea, Rep.) and Hong Kong. A high HCI is no guarantee for a high QoL. Or is the HCI a predictor for a rising QoL within 18 years time?
The lowest top 10 of Quality of Low gives another perspective.
Pakistan and Egypt (Arab. Rep) have an HCI ranking that is twice as low as their QoL position. Would this imply that in the next two decades the Quality of Life will also drop substantially in these countries?
HCI is set up from the following features: child survival, quality of learning, stunting and adult survival. The used QoL index is based upon the indices of: power, pollution, house price to income ratio, cost of living, safety index, health care, traffic commute time and climate index. HCI and QoL use different parameters and also have a clear correlation and a spread: the challenge is to find insights.
Quality of Life and Human Capital.
Tolstoy wrote: “All happy families are alike; each unhappy family is unhappy in its own way”. Let’s try to learn from information and see what happy and less happy countries can learn from each other. Now and in the future.
Next steps (Further work)
This is where Artificial Intelligence / Machine Learning comes in.
- Get a better QoL dataset with all countries (mainly the countries with lower HCI are not included yet)
- Deep dive into the underlying data (features) of the 2 datasets and the underlying correlations
- Look at historical data (how does HCI and QoL develop; especially in relation to each other) and set up a prediction model
- Set up results and insights in a presentable way (assuming that from the relations between QoL and HCI can be learned)
- Share insights with others (e.g. via social media)
- Make impact in a positive way
I would like to do this challenging project together with others: please let me know if you are interested to join (mail to email@example.com).
The World Bank: World Development Report (WDR) 2019
The World Bank: Data Catalog Human Capital Index (year 2018, 157 countries)
Numbeo: Quality of Life Index (year 2018, 60 countries)
edX course: The Future of Work: Preparing for Disruption
Henry Bol: Future of Work and the impact of AI
Jim Yong Kim’s presentation at Stanford University ‘Human Capital and Technology: Building the New Social Contract’: