LAC Equity Lab: Human Opportunity Index

Although access to services has been improving over time in the LAC region, it still remains largely unequal across and within countries, and far from universal. The Human Opportunity Index (HOI) measures how individual circumstances (i.e., characteristics -- such as place of residence, gender, and education of the household head -- that should not determine access to basic goods and services) can affect a child’s access to basic opportunities such as water, education, electricity and sanitation. It is a synthetic measure of how far a society is from universal access to an essential good or service, and how equitably access is distributed across individuals (circumstance groups). The HOI is thus an economic indicator that combines coverage rates and equality in a single measure.

This dashboard presents the HOI for several opportunities, for different years, by LAC country. Even though there are many opportunities that affect a child’s life, some data is not available for all countries. Thus the HOI in this dashboard focuses on opportunities grouped into three dimensions: (1) education; (2) housing; and (3) information and communication technologies.

We can measure coverage of a particular opportunity by the percentage of people that have access to it. For example, if there is a population of 100 people and 75 of them have access to water, then there is an overall coverage rate of 75 percent. For calculating the HOI, we consider inequalities in these opportunities and average them in order to penalize the overall coverage rate. For example, in the case in which all possible groups have the same access this penalization is zero. If one group has full access while another has null access, the penalization drives the HOI to a much lower value than its coverage.

The HOI was proposed by Paes de Barros et al. (2008) and is an adaptation of the welfare function suggested by Amartya Sen (1976). In particular, this index takes into account the average coverage of a certain service and the inequality of its distribution. It follows the same logic as GDP per capita and inequality indicators in Sen's welfare function. An increase in the index can be associated to either an increase in coverage or to a more equitable distribution of that service.

Since the numbers presented here are based on SEDLAC (a regional data harmonization effort that increases cross-country comparability) they may differ from official statistics reported by governments and national statistical offices. The nearest year is used for countries in which data are not available in a particular year. For most opportunities, coverage and HOI are calculated for children between the ages of 0 and 16. For 'school attendance' these indicators are calculated for children between the ages of 10 to 14 years, and for ‘finished primary school’, 12 to 16 years.

Decomposition of the changes in the HOI

The change in the HOI between two selected years can be decomposable into the composition effect (due to changes in the distribution of circumstances), and the coverage effect (the contribution of changes in the coverage rates of different circumstance groups). The latter may also be decomposable into the scale effect (capturing the impact of proportional change in the coverage rates for all circumstance groups) and the equalization effect (capturing improvements in the coverage rates specifically for groups with below-average coverage rates relative to groups with above-average coverage rates).

Source: Molinas, J., R. Paes de Barro, J. Saavedra and M. Giugale. 2012. "Do Our Children Have a Chance?" The 2010 Human Opportunity Report for Latin America and the Caribbean. Washington, DC: World Bank.

For more information on the calculation of HOI, click here.