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

Pundits Split Over Long-Term US Role in Afghanistan

Security pact remains condition for American presence beyond 2014; deadline criticized More

US Eyes Islamic State Threat

Officials warn that IS could pose a threat to US homeland More

Video Ukraine: Captured Troops Proof of Russian Role in Separatist Fight

Moscow says Russian troops crossed into Ukrainian territory by mistake 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.
Scientists Unlock Mystery of Bird Flocksi
X
George Putic
August 25, 2014 4:00 PM
How can flocks of birds, schools of fish or herds of antelope suddenly change direction -- all the individuals adjusting their movement in concert, at seemingly the same time? British researchers now have some insights into this behavior, which has puzzled scientists for a long time. VOA's George Putic has more.
Video

Video Scientists Unlock Mystery of Bird Flocks

How can flocks of birds, schools of fish or herds of antelope suddenly change direction -- all the individuals adjusting their movement in concert, at seemingly the same time? British researchers now have some insights into this behavior, which has puzzled scientists for a long time. VOA's George Putic has more.
Video

Video Ukraine: Captured Troops Proof of Russian Role in Separatist Fight

Ukrainian officials say they have captured Russian soldiers on Ukrainian territory -- the latest accusation of Moscow's involvement in the conflict in eastern Ukraine. VOA's Gabe Joselow reports from the Ukrainian side of the battle, where soldiers are convinced of Russia's role.
Video

Video Rubber May Soon Come From Dandelions

Synthetic rubber has been around for more than a century, but quality tires for cars, trucks and aircraft still need up to 40 percent or more natural rubber content. As the source of natural rubber, the rubber tree, is prone to disease and can be affected by bad weather. So scientists are looking for replacements. And as VOA’s George Putic reports, they may have found one in a ubiquitous weed.
Video

Video Jewish Life in Argentina Reflected in Yiddish Tango

Jewish people from across Europe and Russia have been immigrating to Argentina for hundreds of years. They brought with them dance music that was eventually mixed with Argentine tango. The result is Yiddish tango -- a fusion of melodies and cultural experiences that is still evolving today. Elizabeth Lee reports on how one band is bringing Yiddish tango to Los Angeles.
Video

Video Peace Returns to Ferguson as Community Tries to Heal

Thousands of people nationwide are expected to attend funeral services Monday in the U.S. Midwestern city of St. Louis, Missouri, for Michael Brown, the unarmed African-American teenager who was fatally shot by a white police officer August 9 in the St. Louis suburb of Ferguson. The shooting touched off days of violent demonstrations there, resulting in more than 100 arrests. VOA's Chris Simkins reports from Ferguson where the community is trying to move on after weeks of racial tension.
Video

Video Meeting in Minsk May Hinge on Putin Story

The presidents of Russia and Ukraine are expected to meet face-to-face Tuesday in Minsk, along with European leaders, for talks on the situation in Ukraine. Political analysts say the much welcomed dialogue could help bring an end to months of deadly clashes between pro-Russia separatists and Ukrainian forces in the country's southeast. But much depends on the actions of one man, Russian President Vladimir Putin. VOA's Daniel Schearf reports from Moscow.
Video

Video Artists Shun Russia's Profanity Law

Russia in July enacted a law threatening fines for publicly displayed profanity in media, films, literature, music and theater. The restriction, the toughest since the Soviet era, aims to protect the Russian language and culture and has been welcomed by those who say cursing is getting out of control. But many artists reject the move as a patronizing and ineffective act of censorship in line with a string of conservative morality laws. VOA's Daniel Schearf reports from Moscow.
Video

Video British Fighters on Frontline of ISIS Information War

Security services are racing to identify the Islamic State militant who beheaded U.S. journalist James Foley in Syria. The murderer spoke English on camera with a British accent. It’s estimated that several hundred British citizens are fighting for the Islamic State, also called ISIL or ISIS, alongside thousands of other foreign jihadists. Henry Ridgwell reports for VOA from the center of the investigation in London.

AppleAndroid

World Currencies

EUR
USD
0.7537
JPY
USD
103.79
GBP
USD
0.6032
CAD
USD
1.0957
INR
USD
60.522

Rates may not be current.