Standard of living vs quality of life

In the din caused by regular macroeconomic updates of economic progress we tend to lose sight of the quality of life – a right of the common citizen. These include things like personal safety, leisure time and health facilities, among others.

Gross domestic product (GDP), the most common gauge of material progress, has been termed a distorting lens by the Nobel laureates Abhijit Banerjee and Esther Duflo. As a result, non-traditional measures that go beyond the narrow confines of GDP are in the limelight affording a 360∘ view.

One such yardstick, the Social Progress Index (SPI), made its debut in 2011. The accounting firm Deloitte terms it as "a global view of people's quality of life, independent of wealth". In other words, SPI looks at how effective countries are at turning their economic development to social progress. Some are (e.g., Ghana) while others are not (e.g., the USA).  

In the global rankings for 2020 Bangladesh scores 55.23 (out of a maximum 100) and is pegged at number 123 out of 163. Norway comes out on top with a score of 92.72. At the bottom of the pile is Chad.

Sitting at No 117, India is ahead of us, but Pakistan fares worse at No 141. The report which came out in September is full of actionable intelligence. For instance, globally, environmental quality and inclusiveness show alarming results.

The report goes on to state "……..the ones (i.e., countries) that improved the most since 2011 have been low and lower-middle-income countries,…………..while richer countries have tended to improve slowly.

The United States,………….ranks 28th in the 2020 Social Progress Index, falling behind less wealthy countries like Greece, Cyprus and Estonia". Along with the United States, Brazil and Hungary are the only three states that have regressed since 2011.  Interestingly, the four countries at the top are headed by women. The ones falling behind (mentioned above) are led by macho men.

An overall score is given to each country measuring three over-arching categories: Basic Human Needs, Foundations of Wellbeing, and Opportunity.

Each category is given a score between 0 and 100. These scores are, in turn, derived from scores assigned to twelve sub-categories (4x3).

These sub-categories are further drilled down to a total of fifty indicators. A particular country may exhibit wide variations among categories, sub-categories and their constituent units. This calls for management by exception for those willing to listen.

The good news is that in general, the world is improving. Since 2014, the world average score increased from 60.63 to 64.24, and there has been an improvement on eight out of 12 components of social progress.

The SPI scorecard encompasses all seventeen SDG goals. So, there is overlap between the two. However, for SPI, each country is compared against fifteen others having the same, or similar, GDP per person. Kyrgyzstan and Ghana have improved the most relative to their comparators, while Saudi Arabia and Equatorial New Guinea have improved the least.  

Based on their scores the 163 countries are placed in six tiers. Bangladesh and India are placed in Tier 5 whereas Pakistan is in Tier 6. With a score of 73.2, Sri Lanka is way ahead of its SAARC neighbours being placed in Tier 3 and having 64th place.

Bangladesh scores very poorly (41.76) for Inclusiveness under the Opportunity category. In contrast, Sri Lanka scores 57.39. The differences between the two countries are starker when it comes to Basic Human Needs and Foundations of Wellbeing categories, being 81.89 vs. 64.18 and 80.33 vs. 59.75 respectively.

Michael Green, the CEO of Social Progress Imperative, says the whole point of the SPI is to point policymakers toward how to achieve growth with social progress leading to more equitable, just, and humane societies.

The Author is a retired bank officer.