The Human Development Report Office (HDRO) in New York, which is part of the United Nations Development Programme (UNDP), has made a change in the technical notes for the human development report and the accompanying Human development index (HDI). For the 2021/22 report (and in the preceding years), the maximum limit for income was justified by reference to a paper by Kahnemann and Deaton:
The maximum is set at $75,000 per capita. Kahneman and Deaton (2010)* have shown that there is virtually no gain in human development and wellbeing from annual income above $75,000 per capita.
* High income improves evaluation of life but not emotional well-being
In the summer of 2022, I pointed out to the Chief statistician at the HDRO that this justification is wrong and misleading on several accounts, since the claims made in the technical notes were not supported by claims made in Kahneman and Deaton´s article. The chief statistician acknowledged that I was correct. My criticism was repeated in an invited talk I gave in the HDRO Seminar (from a distance, digitally) on March 21st 2023.
In the technical notes for the 2023/24 report, it now says, with no reference:
"The maximum is set at $75,000 per capita so that additional income above the maximum does not directly contribute to a country’s HDI value or improve its ranking."
While the HDRO has in this way removed an erronous justification for the maximum income threshold, the threshold now stands without any justification whatsoever.
