Critically evaluate the usefulness of HDI as an alternative indicator of economic well-being. Explain how the concept of HDI appears to have been inspired in part by A.K. Sen's appealing theoretical ideas of "entitlements" and "capabilities".
HDI is a very good measure of well-being and development. This is because it includes both economic and social indicators. HDI includes education, GNI and life expectancy. This means that it includes all the aspects needed to understand an individual's well being. It is a broad measure to development.
Sen had said that for a nation to develop, it is essential that the capabilities of the citizens are enhanced. Capabilities or freedom to achieve what they value is understood as achieving well being. The HDI is inspired by Sen because it recognises the concept of development as enlarging choice sets that people have. This is why HDI includes components other than income as they are crucial in gaining an overall understanding of people's well being.
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