Measuring human capital: a systematic analysis of 195 countries and territories, 1990–2016

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The Lancet
Oct 06, 2018 Volume 392 Number 10154 p1167-1278 e10
https://www.thelancet.com/journals/lancet/issue/current
Articles
Measuring human capital: a systematic analysis of 195 countries and territories, 1990–2016
Stephen S Lim, Rachel L Updike, Alexander S Kaldjian, Ryan M Barber, Krycia Cowling, Hunter York, Joseph Friedman, R Xu, Joanna L Whisnant, Heather J Taylor, Andrew T Leever, Yesenia Roman, Miranda F Bryant, Joseph Dieleman, Emmanuela Gakidou, Christopher J L Murray
Open Access
Summary
Background
Human capital is recognised as the level of education and health in a population and is considered an important determinant of economic growth. The World Bank has called for measurement and annual reporting of human capital to track and motivate investments in health and education and enhance productivity. We aim to provide a new comprehensive measure of human capital across countries globally.
Methods
We generated a period measure of expected human capital, defined for each birth cohort as the expected years lived from age 20 to 64 years and adjusted for educational attainment, learning or education quality, and functional health status using rates specific to each time period, age, and sex for 195 countries from 1990 to 2016. We estimated educational attainment using 2522 censuses and household surveys; we based learning estimates on 1894 tests among school-aged children; and we based functional health status on the prevalence of seven health conditions, which were taken from the Global Burden of Diseases, Injuries, and Risk Factors Study 2016 (GBD 2016). Mortality rates specific to location, age, and sex were also taken from GBD 2016.
Findings
In 2016, Finland had the highest level of expected human capital of 28·4 health, education, and learning-adjusted expected years lived between age 20 and 64 years (95% uncertainty interval 27·5–29·2); Niger had the lowest expected human capital of less than 1·6 years (0·98–2·6). In 2016, 44 countries had already achieved more than 20 years of expected human capital; 68 countries had expected human capital of less than 10 years. Of 195 countries, the ten most populous countries in 2016 for expected human capital were ranked: China at 44, India at 158, USA at 27, Indonesia at 131, Brazil at 71, Pakistan at 164, Nigeria at 171, Bangladesh at 161, Russia at 49, and Mexico at 104. Assessment of change in expected human capital from 1990 to 2016 shows marked variation from less than 2 years of progress in 18 countries to more than 5 years of progress in 35 countries. Larger improvements in expected human capital appear to be associated with faster economic growth. The top quartile of countries in terms of absolute change in human capital from 1990 to 2016 had a median annualised growth in gross domestic product of 2·60% (IQR 1·85–3·69) compared with 1·45% (0·18–2·19) for countries in the bottom quartile.
Interpretation
Countries vary widely in the rate of human capital formation. Monitoring the production of human capital can facilitate a mechanism to hold governments and donors accountable for investments in health and education.
Funding
Institute for Health Metrics and Evaluation.

Research in context
Evidence before this study
Previous studies have examined the association between a range of dimensions of human capital and economic growth. These studies have shown that the average number of years of completed schooling is associated with subsequent economic growth and that incorporation of measures of the distribution of education might explain more of this variation. More recent analyses from the past 5–10 years that use performance on international student assessments as a measure of educational quality or learning find it to be a more predictive measure of economic growth than attainment alone. Far fewer efforts have been made to expand the measurement of human capital so that it also encompasses health; however, these studies suggest that an expanded measurement might also be important for understanding economic growth. Despite the accumulated evidence of the associations between the core dimensions of human capital—education and health—and economic growth, no comprehensive measure presently exists for all countries globally.

Added value of this study
This study provides a new measure of expected human capital for 195 countries, consisting of four components: educational attainment, learning, health, and survival, based on a systematic analysis of all available data. This measure, in units of health, education, and learning-adjusted expected years lived between age 20 and 64 years, is estimated each year from 1990 to 2016 and can be updated annually. Compared with existing metrics of human capital, this more comprehensive measure provides a detailed characterisation of these differences across countries and over time, revealing marked variations in expected human capital for children born in different countries and differential progress in the improvement of expected human capital over the past 25 years. An inconsistent gender differential exists—for countries below approximately 10 years of expected human capital, this tends to be higher in males; for countries above this level, it is higher in females.

Implications of all the available evidence
Human capital is an important factor in economic development that requires improved metrics and regular monitoring. The systematic analysis of data on four components—educational attainment, learning, health, and survival—establishes the feasibility of an annual measurement of expected human capital, providing a means to monitor and assess investments in health and education. This more comprehensive measure of human capital has revealed variability across countries in building human capital that is independent of baseline levels of health and education, suggesting that building human capital is amenable to policy intervention.