We humans

Why we shouldn’t judge a country by its GDP

Apr 22, 2015 /

Gross Domestic Product has become the yardstick by which we measure a country’s success. But, says Michael Green, GDP isn’t the best way to measure a good society. His alternative? The Social Progress Index, which measures things like basic human needs and opportunity.

Analysts, reporters and big thinkers love to talk about Gross Domestic Product. Put simply, GDP, which tallies the value of all the goods and services produced by a country each year, has become the yardstick by which we measure a country’s success. But there’s a big, elephant-like problem with that: GDP only accounts for a country’s economic performance, not the happiness or well-being of its citizens. With GDP, if your richest 100 people get richer, your GDP rises … but most of your citizens are just as badly off as they were before.

That’s one of the reasons the team that I lead at the Social Progress Imperative launched the Social Progress Index in 2014. The Social Progress Index determines what it means to be a good society according to three dimensions: Basic Human Needs (food, water, shelter, safety); Foundations of Wellbeing (basic education, information, health and a sustainable environment); and Opportunity (do people have rights, freedom of choice, freedom from discrimination, and access to higher education?)

Together, these 12 components form the Social Progress framework. We evaluated them using data from a wide variety of international sources (see the full list) to assess 133 countries to come up with a ranking of the world’s most socially progressive countries — and this year, for the first time, an overall progress score for the world. Here are six charts from the 2015 ranking that I think speak volumes.

Chart 1: The top 68 countries on The Social Progress Index
It’s interesting, but not particularly surprising, that the results at the top of the 2015 Index are actually pretty similar to last year’s. Social progress is less volatile than GDP, so the Social Progress Index isn’t going to jump around from year to year.


Norway topped our list this year. If you look at its scorecard, it has exceptional scores across all three dimensions, having excellent access to water and sanitation, doing very well on basic education and offering great personal freedom and choice. Norway has a high GDP per capita, thanks to its abundance of natural resources. But this isn’t always the case. Many resource-rich countries — from Kuwait to Angola — don’t share the benefits of wealth so well and show low social progress relative to their GDP per capita. It may be the case that, because natural resource wealth doesn’t require the same investments in human and social capital as broad-based economic growth, there isn’t the same incentive for governments to make those investments. But whatever the reason may be, Norway should be a role model for other resource-rich countries.

Chart 2: A telling comparison: New Zealand vs. Norway
Countries can experience similar levels of social progress at vastly different levels of GDP per capita. New Zealand achieves a Social Progress score of 87.08, which is almost as high as Norway’s 88.36, but at a GDP per capita that is half that of Norway: $32,808 versus $62,448.


If you look at New Zealand’s scorecard, it does a bit better than Norway on opportunity — on personal rights in particular — and a little worse on personal safety and ecosystem sustainability.

What exactly is driving this? You’d have to ask the New Zealanders. Indeed, that’s one of the things we hope to do next: identify role models for other countries and unpack how exactly they’re doing the things they do well.

Chart 3: And another telling comparison: Ghana vs. Nigeria
Countries can also experience vastly different levels of social progress even if they have similar levels of GDP per capita. Ghana does better (58.29) on social progress than Nigeria (43.31) even though it has lower GDP — $3,864 versus $5,423.


What’s going on here? Ghana out-performs Nigeria on almost every aspect of social progress, doing particularly well on personal rights and in providing access to information and communications, even though its economic status could be much stronger. Meanwhile, Nigeria is an underperformer. It is not turning economic resources into GDP very effectively. Nigeria needs an inclusive growth strategy to make sure that its oil wealth benefits the whole population.

Chart 4: The overachievers
Some countries over-perform on social progress relative to their GDP per capita. Costa Rica is the biggest aggregate over-performer, showing strength across all the dimensions. The key lesson here is that building social progress takes persistence. Costa Rica has had strong education, health and welfare systems for a long time, as well as a long democratic tradition. SPI measures outcomes — life expectancy, literacy rate — not inputs, like laws passed or money spent. There are no cheats or quick fixes.


For some countries, over-performance may actually be a sign of economic decline rather than progress. Overperformance is relative to GDP per capita, and GDP tends to rise and fall quickly, whereas SPI moves more slowly. If a country’s GDP per capita falls rapidly while SPI takes much longer to decline, its performance relative to GDP per capita may look like it is improving. The over-performers of the former Soviet Union illustrate this point: Moldova, Kyrgyzstan and Tajikistan have not done well economically over the last 20 to 25 years, but their social indicators are better than expected because of the legacy of investments in basic services made when they were part of the Soviet Union.

Chart 5: The underachievers
Countries affected by conflict often underperform, as do countries with natural resource wealth. But so do some of the world’s leading industrial nations like the United States, France and Italy.


Put simply, societies that exclude people do less well in social progress. That’s one of the reasons why the United States ranks 16th. The U.S. has some of the best healthcare in the world — but not for everyone. We see that exclusion across the U.S.’ scorecard: lack of access to health care, lack of access to education, lack of access to information, lack of access to safety and even — relative to other rich country peers — lack of access to piped water.

Meanwhile, France and Italy have an important factor in common: both show weakness in opportunity, with low scores on private property rights, freedom of religion and tolerance of minorities. In addition, Italy’s scorecard shows inflated levels of corruption, while France’s shows the issue of discrimination against minorities. Both also are relatively weak on access to higher education.

One final note: it seems like fast-growing economies like China underperform on social progress. That’s because their new wealth has not yet translated into better social outcomes: investments in education and healthcare may take time to bear fruit, or they haven’t been made yet.

Chart 6: How the world is doing
This year, we worked out a Social Progress score for the world. We’ve taken the population-weighted average of all the countries and summed it up together. This gave a level of social progress that is 61 out of 100, which means that the average human being lives at a level of social progress somewhere between Cuba and Kazakhstan.

In the areas of nutrition, basic medical care and access to basic knowledge, the world scores a very high 85. Those areas have been focuses of the Millennium Development Goals, which to me says that the world can make progress. With economic growth and the right policies — helped in some cases by international aid — I think we can get the world close to the 100 maximum score on basic human needs and access to basic knowledge, as well as on water and sanitation (which is lagging a bit at the moment but which could improve dramatically). Access to information and communications should also improve a lot, driven by technology bringing down the cost and increasing access to mobile phones and internet. Access to higher education is also likely to improve as countries get richer.



But big questions hang over personal safety, personal rights, personal freedom, and tolerance and inclusion. Countries will need to make better choices to improve these. Some countries have chosen not to prioritize personal rights; that’s been part of their development strategy — to focus on growth and keep authoritarianism. And then tolerance and inclusion is low because countries of all levels of income struggle with these issues. If we think about what’s going on in the world with the Islamic State or Charlie Hebdo or Buddhist extremists in Myanmar, the question of how we’re going to live together in societies of tolerance and inclusion is really important. Often, that’s seen as a separate issue — not part of what development is about.

But most worrying of all are health and wellness and ecosystem sustainability, because we find that these don’t improve with rising wealth. As you industrialize, even if you care a bit more about nature, you start consuming more resources. With health, we’re not just looking at life expectancy, we’re also looking at things like obesity rate, deaths from air pollution, suicide rates — which don’t get better if you get richer. These areas aren’t going to improve unless we do something different. It’s time to start coming up with new solutions.