The IHDI combines a country’s average achievements in health, education and income with how those achievements are distributed among country’s population by “discounting” each dimension’s average value according to its level of inequality.
Thus, the IHDI is distribution-sensitive average level of HDI.
Two countries with different distributions of achievements can have the same average HDI value.
Under perfect equality the IHDI is equal to the HDI, but falls below the HDI when inequality rises.
The difference between the IHDI and HDI is the human development cost of inequality, also termed – the loss to human development due to inequality.
The IHDI allows a direct link to inequalities in dimensions, it can inform policies towards inequality reduction, and leads to better understanding of inequalities across population and their contribution to the overall human development cost.
The HDI represents a national average of human development achievements in the three basic dimensions making up the HDI: health, education and income.
Generally countries with less human development also have more multidimensional inequality and thus larger losses in human development due to inequality, while people in developed countries experience the least inequality in human development.
The East Asia and the Pacific Region performs well on the IHDI, particularly in access to healthcare and education, and former socialist countries in Europe and Central Asia have relatively egalitarian distributions across all three dimensions.