The U.S. may be at the top of the world’s GDP rankings, but it’s ranked at 16th, behind Ireland, Austria, Switzerland, and a slew of other countries in this year’s Social Progress Index.
In 2013, the Social Progress Index (SPI) emerged from a World Economic Forum working group with an ambitious goal: to have social progress ranked as a measure of success alongside GDP. Created by the Social Progress Imperative and Harvard Business School Professor Michael Porter, last year’s inaugural SPI ranked 50 countries on their performance across a number of social and environmental indicators within three dimensions: opportunity, basic human needs, and well-being. This time around, the SPI ranks 132 countries, with some surprising results. The big takeaway: while GDP does correlate with a higher SPI score, it’s only one factor that contributes to “social progress.”
Here are the top-ranked countries (click to enlarge):
And the bottom:
The social and environmental components that go into the SPI include personal safety, ecosystem sustainability, health and wellness, shelter, sanitation, equity and inclusion, and personal freedom and choice. Each component is calculated based on specific outcomes–health and wellness, for example, is determined by life expectancy, obesity, cancer death rate, and other factors.
Certain factors are more related to GDP than others. “It seems that basic human needs are actually most responsive to economic growth,” says Michael Green, executive director of the index. “Economic growth gives you the basic stuff to feed a population, get basic shelter, get vaccinated. But on foundations of well-being, there’s a slightly looser correlation.” As countries grow economically, their environmental scores tend to deteriorate. Obesity rates also tend to rise, and health scores are lowered as a result.
Out of the three dimensions (opportunity, basic human needs, well-being), opportunity–encompassing factors like personal rights and tolerance–has the loosest correlation with GDP. “It’s a paradox we’re trying to understand. There’s a big jump in opportunity scores for high-income countries, but we’re not sure which way the correlation goes. Is it only when you become a high-income country that you can afford the opportunity?” Green says.
The SPI also looked at government expenditures as a percentage of GDP to see if they’re correlated with positive social outcomes (whether big government leads to social progress, in other words). There was a loose positive correlation, but “it’s so low that it’s almost meaningless,” says Green. Here’s what he’s talking about:
Take a close look at the index and you can see where GDP stops explaining social progress. Norway, the country with the highest per capita GDP in the rankings, comes in fifth. Meanwhile, New Zealand is at the top of the index, even though its GDP per capita is not even half of Norway’s. It’s a similar story at the bottom of the rankings, where Chad (GDP 1870.36 per capita) finishes dead last and Liberia (GDP 559.71) finishes 13th from the bottom.
In the developing economies of the BRICS countries, the story “generally is not a good one,” says Green. South Africa is underperforming on the index for its GDP, while India falls behind Bangladesh–a much poorer country. And Russia falls behind the Ukraine (especially awkward right now). Brazil scores the best out of the BRICS, with a strong opportunity score, but the country has big problems with personal safety. “It has lots of rights, but is neglecting basic needs,” says Green.
Overall, resource-rich countries, like Angola, Saudi Arabia, and Kuwait, also tend to underperform.
So what are the top countries doing so well?
Here’s the scorecard for New Zealand (note: “relative weakness vs peers” and “relative strength vs peers” compare New Zealand to other countries with a similar GDP).
Switzerland does well on safety, life expectancy, religious freedom, and sustainability (a relative rarity for wealthy countries), while Iceland scores well on almost all categories.
The SPI isn’t just an academic exercise. Paraguay has started using the index to guide its national development plan, and Steve Almond, global chairman at Deloitte (the private sector partner of the SPI), is hopeful that other countries will take note. Businesses, in particular, could use the index to guide their corporate social responsibility efforts in different parts of the world.
“It’s widely accepted now that business does have a fundamental role to play in building society and many companies have issued corporate responsibility reports, have community investment programs. They have not really had any reference point or a roadmap, if you like, that helps them to decide where are the places in the world that have the most pressing needs, and which of those needs are most closely associated with the core skills, core competencies, and the values of that company,” says Almond. “The index is much bigger this year, and it gives the business community a great reference point.”
Almond believes that the index can also act as a catalyst for government, nonprofits, and civil society to work together on pressing problems. While more mature economies may not give the SPI as much attention as developing countries, they may be intrigued to see how low their rankings are in comparison to their GDPs, and how the rankings shift over the years.
The ultimate goal with the SPI, says Almond, is that it “becomes not the successor to GDP, but a comparable indicator to GDP–one that as it matures, gains recognition and really does help point to where policymakers need to pay attention.”
Check the SPI website for the full rankings.