Human capital: Comparison of IHME and World Bank estimates published in 2018

“Measuring human capital: a systematic analysis of 195 countries and territories, 1990–2016,” published by IHME in The Lancet on September 24, 2018, introduces estimates for a new measure of the level of human capital in each country (article available here).

In Chapter 3 of the 2019 World Development Report (WDR), the World Bank also introduces a new measure of human capital (current draft available here). Further methodological details are available from a World Bank working paper (available here). All information presented in this document reflects the WDR draft dated September 13, 2018, and the working paper dated September 2018.

Both the IHME and World Bank human capital measures utilize data on mortality, health, education, and learning to create a comprehensive metric of the human capital of the future workforce that is comparable across countries. The two measures differ, however, in their conceptual basis, including what is captured in each component, the data sources utilized, the methods of aggregation across the various components, and the countries and years for which estimates are produced. This document provides a comparison of the construction of these two human capital measures and a preliminary comparison of the results.

There are four key differences between the World Bank measure of human capital and the IHME measure of human capital:

1. The IHME measure incorporates post-secondary education by measuring the total years of completed education. In contrast, the World Bank measure uses data on educational attainment up to the end of secondary school; this implies that in the World Bank measure, tertiary education (i.e., university, college, or trade school) does not increase human capital. 
2. The IHME measure includes a number of health conditions for which the scientific literature supports strong links to productivity and/or cognitive function. In the World Bank measure, functional health is measured by only one condition, stunting in children under age 5, in addition to the adult survival rate as a proxy for overall health. In many countries for which stunting estimates are not available, only adult survival is used.
3. The IHME measure covers 195 countries from 1990 to 2016, including low- and middle-income countries with minimal data. The IHME measure includes a time-series (based on the relationship between covariates and spatial and temporal patterns) in order to assess progress in building human capital over the past 25+ years, disaggregates the measure by sex for all countries in order to understand gender differences, and can be re-estimated for all countries annually. The World Bank measure covers only 157 countries and for the most recent year for which data are available. The World Bank reports these values as being representative of 2018, assuming that 2018 values are the same as the most recent year for which the data are available.
4. The IHME measure is based on a larger range of data sources and improved methods. IHME uses educational attainment data from 2,522 censuses and surveys, whereas the World Bank measure of educational attainment is based on enrollment data, which are known to have quality issues. For example, these data tend to overestimate attendance due to students repeating grades or older learners returning to school – to address this problem the World Bank attempts to correct for repetition of school years. For health, the World Bank relies on UN Population Division estimates of adult survival, which in Africa are largely derived from model predictions based on under-5 death rates and do not use sibling survival data.  

The document provides further detail of differences between the IHME and World Bank human capital measures and can be downloaded here.