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 human development. 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 overall 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. A recent measure of inequality in the HDI, the Coefficient of human inequality, is calculated as an unweighted average of inequality across three dimensions. For more details on computation, see Technical notes.

The IHDI is calculated for 150 countries.