News / Economy

Rival GDP Measure Puts Emphasis on Social Progress

Rival GDP Measure Puts Emphasis on Social Progressi
X
April 11, 2013 8:25 PM
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. As Henry Ridgwell reports for VOA, the SPI's creators hope it will offer lessons to policymakers in fast growing African and Latin American economies.
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.

You May Like

African States Push to Keep Boko Haram Offline

Central African telecoms ministers working with Nigeria to block all videos posted by Boko Haram in effort to blunt Nigerian militant group's propaganda More

Falling Oil Prices, Internet-Savvy Youth Pose Challenge for Gulf Monarchies

Across the Gulf, younger generations are putting a strain on traditional politics More

Philippines Call Center Workers Face Challenges

Country has world’s largest business process outsourcing, or BPO, industry, employing some one-million workers More

This forum has been closed.
Comment Sorting
Comments
     
by: Anders Corr, Ph.D. from: New York, NY
April 18, 2013 7:35 PM
Of course Sweden, Britain, and Switzerland have the best Social Progress Index (SPI) scores, because these countries have some of the highest GDPs per capita of the fifty countries in the index. It is no coincidence that the three lowest SPI scores – Ethiopia, Nigeria, and Uganda, have very low GDPs per capita. The best way to understand the Social Progress Index is therefore to control for GDP per capita. Corr Analytics did simple regression analysis on the Social Progress Index data to show that approximately 84% of the index is explained by gross domestic product (GDP) per capita. Predictably, countries with large economies relative to their populations will have more wealth that can be channeled to basic necessities measured by the Social Progress Index.

Therefore the simpler standard used by economists for decades — GDP per capita — works quite acceptably for well-being. Interestingly for development economists, when comparing the index to GDP per capita using loglinear regression, it shows that for countries below the mean GDP per capita ($16,030 in 50 countries sampled by the Social Progress Index), the positive effect of GDP per capita growth on social progress is very high. The effect after mean GDP per capita is still positive, but of a much lesser magnitude. Development funding, therefore, yields the highest social progress gains in relatively poorer countries.
Adding the degree of democracy to the regression brings the explained variance of SPI to 87%. Democratic nations are better able to leverage GDP for basic necessities, because of effective voting coalitions of the economically disadvantaged.

The theoretical range of the Social Progress Index is zero to 100, with 100 indicating the greatest possible provision of well-being. The actual range of the data is 32 (Ethiopia) to 65 (Sweden). Given the 33-point actual range, the effect of changes in GDP per capita and democracy are substantial. An increase of $10,000 in GDP per capita for the poorest country in the dataset yields an expected increase of 17.5 points on the Social Progress Index. That same $10,000 increase for the richest country yields only a 0.6 expected increase on the Social Progress Index. A change from pure dictatorship (autocracy) to full democracy yields an expected 7.5-point increase on the Social Progress Index.

The regression also elucidates countries that are social performers and laggards given GDP per capita. Vietnam, Costa Rica, the Philippines, Britain, Bulgaria, and Argentina are the six highest performers given GDP per capita. With the exception of Vietnam, these countries are democratic. The UAE, Nigeria, Russia, South Africa, Kazakhstan, and Botswana are the six lowest performers on the Social Progress Index given GDP per capita. Most of the laggards are dictatorial or have pseudo-democratic forms of government.

Graphs, tables, and data further illustrating the observations on SPI above are available at www.canalyt.com.

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
US Supreme Court Hears Hijab Discrimination Casei
X
Katherine Gypson
February 25, 2015 11:30 PM
The U.S. Supreme Court has heard opening arguments in a workplace religious discrimination case that examines whether a clothing store can refuse to hire a young woman for wearing the headscarf she says is a symbol of her Muslim faith. Katherine Gypson reports from the Supreme Court.
Video

Video US Supreme Court Hears Hijab Discrimination Case

The U.S. Supreme Court has heard opening arguments in a workplace religious discrimination case that examines whether a clothing store can refuse to hire a young woman for wearing the headscarf she says is a symbol of her Muslim faith. Katherine Gypson reports from the Supreme Court.
Video

Video Falling Gas Prices Hurt Nascent Illinois Hydraulic Fracturing Industry

Falling oil prices are helping consumers purchase cheaper petroleum at the pump. But that’s made hydraulic fracturing or “fracking” less economically viable for the companies in the United States invested in the process. VOA’s Kane Farabaugh reports on one Midwestern town that was hoping to change its fortunes by cashing in on the next big U.S. oil boom.
Video

Video Fighting in Sudan's South Kordofan Fuels Mass Displacement

Heavy fighting in Sudan's South Kordofan state is causing hundreds of thousands to flee into uncertain conditions. Local aid organizations estimate as many as 400,000 civilians have been internally displaced since the conflict began more than three years ago, while another 250,000 have fled across the border to refugee camps in South Sudan. VOA's Adam Bailes reports.
Video

Video Lao Dam Project Runs Into Opposition

A Lao dam project on a section of the Mekong River is drawing opposition from local fishermen, international environmental groups and neighboring countries. VOA's Say Mony visited the region to investigate the concerns. Colin Lovett narrates.
Video

Video A Filmmaker Discovers Her Biracial Identity in "Little White Lie

Lacey Schwartz grew up in an upper middle-class Jewish family, in a town in upstate New York where almost everyone she knew was white. She assumed that she was, as well. Her recent documentary, Little White Lie, tells the story of how she uncovered the secret of her true racial background. VOA’s Carolyn Weaver has more on the film.
Video

Video Deep Under Antarctic Ice Sheet, Life!

With the end of summer in the Southern hemisphere, the Antarctic research season is over. Scientists from Northern Illinois University are back in their laboratory after a 3-month expedition on the Ross Ice Shelf, the world’s largest floating ice sheet. As VOA’s Rosanne Skirble reports, they hope to find clues to explain the dynamics of the rapidly melting ice and its impact on sea level rise.
Video

Video US-Cuba Normalization Talks Resume Friday

Negotiations aimed at normalizing diplomatic relations between the U.S. and Cuba resume Friday. On the table: lifting a half-century trade embargo and easing banking and travel restrictions. There's opposition in Congress, but some analysts say there may be sufficient political and economic incentives in both nations for a potential breakthrough this year. VOA's Mil Arcega reports.
Video

Video Pakistan's Deadline For SIM Registration Has Cellphone Users Scrambling

Pakistani cell phone users have until midnight Thursday to register their SIM cards, or their service will be cut off. While some privacy experts worry about government intrusion, many Pakistanis are just worried about keeping their phone lines open. VOA Deewa reporter Arshad Muhmand has more from Peshawar.
Video

Video Myanmar Warns Factory Workers to End Strikes

Outside Myanmar's main city Yangon, thousands of workers walked off their jobs earlier this month demanding a doubling of their wages, pay raises after a year and input from labor unions on industrial regulations. Since Friday, the standoff has grown more tense as police moved in to disrupt the sit-ins, resulting in clashes that injured people from both sides. VOA correspondent Steve Herman visited industrial zones which have become a focus of Myanmar's fledgling workers rights movement.
Video

Video Oscar Winners Do More Than Thank the Academy

The Academy Awards presentation is Hollywood’s night to reward the best movies from the previous year. It’s typically a lot of glitter, a lot of thank you’s, a lot of speeches. But many of this year’s speeches carried messages beyond the thank you's. VOA’s Carolyn Presutti takes a look.

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

World Currencies

EUR
USD
0.8836
JPY
USD
118.88
GBP
USD
0.6451
CAD
USD
1.2469
INR
USD
61.751

Rates may not be current.