The Human Development Report 1995 introduced two new measures of human development that highlight the status of women. The first, Gender-related Development Index (GDI), measures achievement in the same basic capabilities as the HDI does, but takes note of inequality in achievement between women and men. The methodology used imposes a penalty for inequality, such that the GDI falls when the achievement levels of both women and men in a country go down or when the disparity between their achievements increases. The greater the gender disparity in basic capabilities, the lower a country's GDI compared with its HDI. The GDI is simply the HDI discounted, or adjusted downwards, for gender inequality.
The second measure, Gender Empowerment Measure (GEM), is a measure of agency. It evaluates progress in advancing women's standing in political and economic forums. It examines the extent to which women and men are able to actively participate in economic and political life and take part in decision-making. While the GDI focuses on expansion of capabilities, the GEM is concerned with the use of those capabilities to take advantage of the opportunities of life.
The two measures have been used as advocacy and monitoring tools for gender-related human development analysis and policy discussions. To mark the 10 year anniversary of the GDI and GEM project, the Human Development Report Office sponsored in 2006 a workshop to evaluate the indices in order to identify areas of improvement and also consider alternative measurement tools of gender equity as a key aspect of human development.
The review concluded that the indices have often been misinterpreted, particularly the GDI. The GDI is not a measure of gender inequality. It is the HDI adjusted for gender disparities in its basic components. To get a measure of gender inequality, one should use the difference or the ratio of two indicators. In addition, the difference between the HDI and the GDI tend to be small because those captured by the three dimensions tend to be small, giving a misleading impression that gender gaps are irrelevant. Due to the aversion to inequality formula used to calculate the GDI, gender disparities relating to employment and quality of education for example are not captured.
The GEM on the other hand
measures political participation and decision making power, economic
participation and command over resources. Its calculation mirrors that of the
GDI (see : 
Technical note 1 HDR 2007/2008 [5.680 KB] for more details on calculating the
GDI and the GEM). As a practical implication of the use of the estimated earned
income used to measure economic participation a poor country cannot achieve a
high value for the GEM and vice versa for rich countries. For more details on
the workshop, see Readers guide and note to tables Readers' guide [390 KB] and Klasen 2006 (UNDP's Gender-related Measures: Some Conceptual Problems and Possible Solutions) and Schuller 2006 (The Uses and Misuses of the Gender-related Development Index and Gender Empowerment Measure: A Review of the Literature).
The 2008 Human Development Indices: A statistical update presents a number of potential methodological innovations in order to better capture gender inequalities. To this end, the Update looked at disparities between men and women. For example, it finds that despite the huge advances in women’s rights and in key areas like education, gender inequalities are still pervasive. For additional research initiatives on this topic please see Klasen, S. and D. Schuler (2007) “Reforming the gender-related development index (GDI) and the gender empowerment measure (GEM): Implementing some of the proposals”.
In HDR 2009 the GDI and GEM methodologies are applied at the global level to rank 155 countries according to the GDI and 109 according to the GEM. The same methodologies can also be applied at the national and sub-national levels through disaggregated GDIs and GEMs so as to compare differences between regions, ethnic groups, age groups, etc.
Moreover, the methodology used to construct the GDI and GEM could be used to assess inequalities not only between men and women, but also between other groups such as rich and poor, young and old, etc.
