Print options

April 11, 2013

Rival GDP Measure Puts Emphasis on Social Progress

by Henry Ridgwell

There is a new way to measure a nation's success, called the Social Progress Index. The economists and other experts behind the SPI say it measures things that directly affect ordinary people, like access to food, opportunity and medical care. That is a different approach than the traditional Gross Domestic Product, or GDP, which just adds up the output of goods and services - ignoring things like air quality.

The SPI's creators hope it will offer lessons to policymakers in fast-growing African and Latin American economies.

Since the early 20th century, the United States has topped the global table of Gross Domestic Product.

According to the new Social Progress Index, though, the best country in the world is Sweden. The United States ranks sixth.

The index was designed by academics from Harvard and the Massachusetts Institute of Technology, together with business professionals from across the globe.

"We're not measuring economic proxies for well-being; we're measuring the things that matter to real people," said Michael Green, executive director of the Social Progress Imperative, the body behind the project. "Do I have enough food? Do I have shelter? Do I have access to health care? Do I have opportunity in my life?"

Those questions are answered by measuring 12 diverse components, including nutrition, ecosystem sustainability and personal rights; even measuring access to the Internet.

Britain comes second in the index - a result that surprised Green.

"What Sweden and Britain do well is that they combine the European model of a good social welfare system and a focus on environmental sustainability, with the American model of opportunity and freedom, rights, that kind of thing," he said.

Costa Rica is 12th on the index, the highest-ranked emerging economy in the world. It scores highly on components related to education and environment, and on opportunity.

That's thanks to its history, says Costa Rican national Roberto Artavia, director of Copa Holdings and vice chairman of the Social Progress Imperative.

"124 years of continuous democracy. It has had a social inclusion institution since 1971. It has had full social security since 1941. This seems to have actually created the framework for development - social development - to take place."

The creators of the Social Progress Index insist that it's not politically-motivated.
Alvaro Rodriquez, one of the co-founders of the index, is chairman of the board of Compartamos, the largest microfinance institution in Mexico and Latin America.

"It's not about inputs; it's about outcomes. We were very careful in doing that because otherwise there would be in some way an incentive for big governments and more spending. That's not the case," said Rodriquez.

At 41st, Ghana ranks eight places higher than Nigeria, despite having a similar GDP.

"Nigeria is bottom of the pile on security. So you've got to try to tackle those kinds of issues. We also found challenges for Ghana. Ghana's got to push a bit harder educationally; it's being left behind by other countries in the region," said Green.

Green said the message for policymakers is that you can get high levels of social progress at relatively low levels of GDP.