Beyond wealth, development: measuring freedom to live well

Imagine two people living in the same country. Both are counted as part of an economy whose income is rising, and on paper, the country is doing well. One person has access to quality education, healthcare and secure employment, and the freedom to make choices about their future, while the other struggles to access basic services and opportunities. If both of them are living in the same “developing” economy, can development really be said to have improved equally for both?

This is the problem with treating wealth as the ultimate measure of development. Economic growth does matter, but development should ultimately be about what people are able to be and do with the resources available to them. A country becomes truly developed not simply when it becomes richer, but when its people gain greater capabilities, choices and opportunities to live lives they have reason to value.

For a long time, economic progress was closely associated with increases in national income and gross domestic product (GDP). There is a reason for this: higher income can provide governments with resources for infrastructure, education, healthcare and social protection. However, growth does not automatically guarantee that these benefits will reach everyone. More importantly, income itself does not capture the full range of things people value in life. This is where the distinction between economic growth and economic development becomes essential.

The idea of human development offered a major shift in how this difference is understood. The United Nations Development Programme’s (UNDP) first Human Development Report, in 1990, argued that development is about enlarging people’s choices rather than simply increasing income or wealth. The report placed people, rather than economic output, at the centre of development.

This shift is reflected in the Human Development Index (HDI). Instead of measuring development through income alone, HDI considers three basic dimensions: a long and healthy life, access to knowledge and a decent standard of living. This does not make HDI a perfect measure, but it is an important reminder that a country’s progress cannot be reduced to a single economic figure.

India’s recent experience illustrates why this broader perspective matters. According to UNDP’s 2025 Human Development Report, India’s HDI value rose from 0.676 in 2022 to 0.685 in 2023. This reflects improvements in human development and is certainly worth recognising. But an average can only tell part of the story. It does not show whether those gains are being experienced equally across society.

This is where the Inequality-adjusted Human Development Index (IHDI) becomes especially important. HDI measures average achievement; IHDI adjusts that achievement according to how unequally it is distributed. The distinction is crucial. A country may improve its average levels of health, education and income while substantial differences remain between groups. In such a situation, the headline number can look better than the lived reality of many people.

This leads to the most important idea behind this article: development is not just about having resources; it is about having the real freedom to use them.

This is the central insight of Amartya Sen’s Capabilities Approach. Sen’s contribution to development economics was to move the focus away from commodities and income towards people’s actual capabilities and freedoms. In simple terms, development should ask not only what people have, but what they are genuinely able to be and do. The human development approach used by UNDP is strongly rooted in this idea.

Consider education. A student may technically have access to a school, but if the school lacks adequate teaching, learning resources or safe conditions, does that access translate into a meaningful capability? Similarly, a woman may have the formal right to work, but if social expectations, lack of safety, unpaid care responsibilities or limited opportunities prevent her from entering the labour market, her formal freedom is very different from her real freedom.

This is why the Gender Development Index (GDI) is also relevant. Development cannot be considered complete if improvements in health, education and living standards are distributed differently between women and men: are opportunities expanding for everyone, or only for those who are already better positioned to use them?

The same concern applies to inequality more broadly. Sen’s approach highlights that people differ in their ability to convert income and resources into actual opportunities. Two people with the same income may not have the same quality of life if one faces discrimination, poor health, inadequate public services or other barriers. Therefore, simply increasing average income cannot guarantee equal improvements in well-being.

However, there is an important limitation worth acknowledging. Can freedom and capability really be captured completely by an index? Probably not. HDI, IHDI and GDI are useful because they make development measurable and allow comparisons across countries and over time. But no single index can capture every dimension of a good life. UNDP itself recognises that the concept of human development is broader than any one measure.

This is why alternative measures of development remain important. Well-being, employment, gender equality, social protection, political participation and environmental sustainability all matter. Development should also consider whether today’s improvements can be maintained tomorrow. A society cannot reasonably call itself developed if rising incomes are accompanied by environmental damage that threatens the health and opportunities of future generations.

This does not mean that GDP should be abandoned. That would be an equally simplistic conclusion. Economic growth remains an important means of development. Without adequate resources, it becomes much harder to finance schools, hospitals, infrastructure and social programmes. The real mistake is treating growth as the final destination rather than as a tool for improving human lives. UNDP similarly describes income growth as a means to development rather than an end in itself.

The deeper question, therefore, is not whether a country is becoming richer. It is what that additional wealth allows its people to do.

Can a child turn education into a meaningful opportunity? Can a young person find decent work rather than simply any work? Can a woman participate equally in economic and social life? Can people access healthcare when they need it? Can individuals make genuine choices about their futures? And can all of this happen without compromising the opportunities of future generations?

These questions point beyond wealth and towards a more meaningful understanding of development.

Ultimately, a country should not be judged only by the wealth it creates, but by the freedoms that wealth helps create for its people. Economic growth can give society greater resources, but human development determines whether those resources become real opportunities. The true measure of progress, therefore, is not simply how much an economy produces, but how much freedom people have to live healthy, educated, secure and meaningful lives.

Perhaps the most important question to ask about development is: “How free are people to live well?”