Major Economies Trail Norway in Social Progress Index


APRIL 09, 2015

London. Poverty is more important than inequality in holding back “social progress”, a broad measure of what makes a country a good place to live, researchers said on Thursday, releasing data ranking Norway first and the Central African Republic last.

Health care, education and freedoms are factored into the “social progress index” (SPI), as well as access to food, water and shelter. The index, which gives data for 133 countries, is an alternative to GDP, a measure of economic output.

After Norway at the top of the rankings in the 2015 index came Sweden, Switzerland and Iceland. Lowest ranked after the Central African Republic were Chad, Afghanistan and Guinea.

GDP is not destiny

Last year’s leader, New Zealand, which has half of Norway’s GDP per person, came fifth. Given the huge disparity in wealth between Norway and New Zealand, the latter vastly “overperforms” in social progress terms.

“GDP is not destiny,” said the Social Progress Imperative, which published the index. Costa Rica is ranked above Italy, which has double the GDP per head.

Uruguay, Mauritius and Senegal also have a higher SPI than might be expected given their wealth, while Saudi Arabia, Angola and Iraq are “underperformers”.

The United States came 16th, losing marks for its lack of healthcare provision as well as its high murder and suicide rates. Britain came 11th, Germany 14th, Japan 15th, France 21st, Brazil 42nd, Russia 71st, and China 109th out of 133.

“Countries must invest in social progress, not just economic institutions, to create the proper foundation for economic growth,” said Harvard Business School Professor Michael E. Porter, who advises the index’s publishers.

‘Pretty surprised’

GDP is an “economic proxy” for wellbeing, said Michael Green, chief executive of the Social Progress Imperative. “Let’s not go through those proxies, let’s measure these things directly,” he told the Thomson Reuters Foundation.

The 2015 results found poverty to be strongly associated with low social progress. This was true for both absolute poverty, the proportion living below a certain threshold, and relative poverty, those earning much less than their peers.

However, inequality, as measured by the “Gini coefficient”, was found to have little relationship with social progress.

“Quite honestly I think we were pretty surprised to find that we couldn’t find a significant relationship,” said Green, citing countries in Latin America which have high income inequality but “reasonable” levels of social progress.

Lessons for business

Since launching last year the Social Progress Index has been incorporated into development strategies around the world, including by the government of Paraguay, NGOs in Brazil, and the US state of Michigan.

For businesses, the index can be useful “if you’ve got a choice between two broadly comparable countries in terms of economic potential,” said Steve Almond, global chairman of Deloitte, the world’s largest accountancy firm.

He cited the example of Senegal and Cameroon. They have similar GDP per capita, but Senegal ranks much higher for social progress, in large part due to its better record on personal safety, preventable diseases and environmental sustainability.

This might make a company see an investment in Senegal as lower risk than an investment in Cameroon, information which could not be gleaned from GDP alone, Almond told the Thomson Reuters Foundation.

Almond, who sits on the board of the Social Progress Imperative, eventually wants to see the Social Progress Index recognized as an equal partner “alongside GDP per capita, not instead of it”.

Thomson Reuters Foundation