The HDR later introduced inequality adjusted human development index (IHDI)

'the IHDI is the actual level of human development (accounting for inequality), while the HDI can be viewed as an index of 'potential' human development (or the maximum level of HDI) that could be achieved if there were no inequality”- Human Development Report.

The new IHDI was implemented from June, 2010 and has the following new dimensions:

• A long and healthy life: Life expectancy at birth

• Education index: Mean years of schooling and Expected years of schooling

• A decent standard of living: Gross national income (GNI) per capita

While the HDI measures human development in 3 basic dimensions: health, education and income; the more developed IHDI takes into account not only the average developments of a country based on these dimensions but how those developments are distributed among the population by “discounting” each dimension’s average value according to its level of inequality. One limitation with the old HDI was it hides the disparities in human development across the population within the same country, which makes it confusing because two countries with different level of achievement can have the same HDI value.

Source: it is based on the data from majority of publicly available databases of health, education, income and consumption.

Limitations: it does not account for overlapping inequalities. i.e., if the same people are at the lower end of each distribution. The individual income and education values could be zero or negative, so they have been adjusted to non-zero and non-negative values. This distribution can affect the index.