Using the Index

The United States Prosperity Index has been developed as a practical tool to help identify what specific action needs to be taken to contribute to strengthening the pathways from poverty to prosperity across the 50 states of the Union and D.C., and the counties of the eight selected states. The Index consists of 11 pillars of prosperity, built upon 48 actionable policy areas (elements), and is underpinned by over 200 indicators.

The Index has been designed to benefit a wide range of users, including state and county leaders, policymakers, investors, business leaders, philanthropists, journalists, researchers, and U.S. citizens.

  • State and county leaders can use it to help shape priorities for a policy agenda for their area.
  • Policymakers can use it to determine specific areas that require action to help increase prosperity.
  • Investors can use it to inform capital allocation.
  • Business leaders can use it to identify and communicate the changes they need to improve the business climate and the productive capacity of states and counties.
  • Philanthropists can use it to identify the areas where they can have the greatest impact beyond the well-trodden paths.
  • Journalists and U.S. citizens can use it to hold their state and local government to account.
  • Researchers can use it to complement other datasets to analyze the underlying patterns behind economic and social issues, and inform the broader policy, business, and philanthropic community.

Interpreting the Indexes

For every state and D.C., the Index uses the same indicators, and combines them in the same way to create elements and pillars. Similarly, for the 829 counties in the eight selected states, a consistent set of indicators have been used and combined in the same way to create elements and pillars, mirroring the state level approach.

By using the Index at a state and county level, it is possible to compare the relative performance of each state or county for overall prosperity and for each of the 11 pillars of prosperity, such as health, education, and social capital, as well as the 48 elements within the pillars. The elements have been established to represent key policy areas, such as K-12 Education, government integrity, and mental health, to help facilitate more targeted action at the appropriate level.

Making these comparisons will enable the user to explore which aspects of prosperity are more or less well developed within a state or a county, and how these compare with other states and counties. The higher the ranking, the stronger the performance of that state or county for the pillar or element, when compared with another lower down the rankings. Further to this, the Index also provides data over a 10-year period, making it possible to see whether prosperity has been improving or deteriorating over time, and what specifically is driving that change. This will enable areas of strength, in a state or a county, to be built on and areas of weakness to be addressed. The county level Index enables the performance within a state to be more clearly understood, and it also enables comparison with counties in other states, thus creating an environment in which good practice can be identified and shared across state boundaries.

Applying the Indexes

The data in the state and county level Indexes and analysis contained in the report can be used for a variety of purposes, for example:

  • Benchmarking performance against peers;
  • In-depth analysis of prosperity at the state or county level;
  • Understanding whether prosperity is improving or weakening over time, and why;
  • Identifying the binding constraints to increased prosperity;
  • Informing priorities for setting state and county agendas.

Where a state or a county is showing a strong or weak performance in a pillar, it is possible to drill down and identify what particular policy-related element is driving this trend. This will help inform the required policy action to strengthen performance. For example, it may be discovered that a state or a county’s poor prosperity rankings are driven by a weak performance in education. Upon further investigation, the Index reveals that, although current education policy in the state is weaker in K-12 education, it has been focused on improving tertiary education when contrasted with comparator states. In particular, further investigation of the Index reveals that low completion rates may be driving the weak performance in K-12 education. This information can help to target specific areas that need improvement and provide a starting point for what can be done to improve education, and thereby increase prosperity.

By using the historical data provided by the Index for the example above, it may become apparent that K-12 completion rates have declined rapidly over the past three years. Discussion with local education officials on the decline may reveal that this coincides with the conclusion of a learning difficulties support program, thus pointing to the particular area where action is needed.

Resources Available

There are several tools available to aid analysis and interpretation of, and elicit insight from, the United States Prosperity Index. Alongside the report, which provides a high-level analysis of the findings from the state and county Indexes, the following additional information is available:

  • State profiles: These 15-page profiles, for each of the 50 states and the District of Columbia, provide more detailed pillar, element, and indicator information, including rankings and scores, and how these have changed over time.
  • County profiles: These 15-page profiles, for each of the 829 counties in the eight selected states, provide more detailed pillar, element, and indicator information, including rankings and scores, and how these have changed over time.
  • Indicator scores: An Excel spreadsheet which contains the scores for all of the indicators for each year since 2007 at both the state and county level. Using these scores, the user can carry out more in-depth analysis. Further information on how the scores for each indicator are calculated can be found in the Methodology.

Team members at the Legatum Institute are also available to engage and provide support to those interested in addressing the challenges and opportunities presented by these materials. Please contact us at info@li.com.

Using the Index

Political leaders

The report provides leaders at a state and local level with an overview of the performance of their state or county across the 11 pillars of prosperity and provides the foundation for setting an agenda to create pathways from poverty to prosperity. These can be developed and refined using the more in-depth accompanying resources outlined above.

Policymakers

The Index and its accompanying resources allow policymakers to benchmark the performance of their state or county against peers across 11 pillars and 48 elements of prosperity to create a much more granular perspective of performance and to identify the potential binding constraints to development.

Each of the 48 elements of prosperity have been designed to be recognizable, discrete areas of domestic policy, and are measured using a combination of indicators from a variety of public data sources. The indicators should be interpreted as a set of proxies for the underlying policy concept, and we would encourage policymakers to interpret their score and rank for an element as the trigger for more fundamental analysis of the strengths and weaknesses of its performance. Benchmarking against the basket of indicators within the indexes must be complemented by in-depth context-sensitive analysis, which itself can lead to more balanced agendas across a range of policy areas.

In addition to helping focus analysis, these materials, together with the database of performance, also allow policymakers to develop diagnostic tools and to identify potential options to consider, based on the performance of other states and counties, and the case studies provided.

Philanthropists

There are many opportunities to invest in building stronger social, political, and economic outcomes across the United States. Reversing the decline seen in social capital across the United States will help further increase the prosperity of U.S. citizens. There is a unique role for philanthropists to identify and champion what it takes to build social capital across the counties and states of the U.S.

Investors and business leaders

The business community is well positioned to identify barriers to starting, operating, and growing business, and to demonstrate to government the economic potential from reforms such as lifting onerous regulation and reducing other barriers to help improve the investment environment.

Furthermore, business leaders and investors can contribute to infrastructure policy development by demonstrating the economic impact of investment in communications, transport, and energy projects, where they can be the binding constraint on further increasing prosperity.

Academics and Researchers

For academics and researchers, our database of curated indicators is a unique resource enabling comparison of trends and patterns across the past 13 years for much of the data. By providing a holistic dataset across many disciplines, it provides an opportunity to compare in a straightforward way the impact of disparate factors, such as how living conditions are related to education levels, or how levels of social tolerance are related to levels of institutional trust.

Journalists and civil society

The United States Prosperity Index, at a state and county level, is based on publicly available and verifiable data, which means it can be a powerful resource for those who want to hold up a mirror to those in power and society at large. Holding leaders to account is a crucial role for both journalists and civil society. The institutional, economic and social performance of a state and county is critical to its prosperity, and that of the United States as a whole, and having non-government actors calling out weaknesses, as well as celebrating successes, can help spur on state and county leaders. To do so well requires easy access to reliable data that can be represented in a digestible way.

The Pathway to Transformation

Transformation is a process, not an event. Intermediate benchmarks are most helpful and effective, and the most obvious challenges facing a state, or a county, should be considered in the first instance. Understanding the specifics of each state and county’s circumstances will be critical to determining the sequencing and prioritization. The Indexes provide a set of hypotheses to test. The areas of highest priority will likely be the elements that are performing relatively poorly, but are not necessarily the weakest performing elements, as creating the conditions to warrant improving the weakest performing elements may require improving some of the elements that are less weak first.

It is important to identify the most binding constraint to progress and use it to inform the sequencing and prioritization. To give a rather simplified example, a state may find itself with a weak environment for investment and also low levels of dynamism. In such a situation, simply seeking to increase investment is unlikely to have much of an impact, as investors will be more attracted to investing in an area where there is already a high number of start-ups and new entrepreneurs. In such a circumstance, creating an environment that attracts new businesses and start-ups would likely be a more impactful first step.

As no single state has yet succeeded in fully securing both economic and social wellbeing for its residents, clear opportunities exist for states and counties to learn from each other. The Indexes identify these opportunities for improvement, and also where other states and counties have been successful in addressing the same challenges. This can guide supplementary research to inform the ways in which successful strategies from one region might be adapted to address weaknesses in another region.

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