UK: Deloitte Monday Briefing: Measuring Social Progress

Last Updated: 15 April 2014
Article by Ian Stewart

Most Read Contributor in UK, August 2017
  • Gross Domestic Product (GDP) has been the yardstick measure of economic performance since it was formalised by the US economist Simon Kuznets 80 years ago. Yet, even on the day of its launch Kuznets warned that the "welfare of a nation can scarcely be inferred from a measurement of national income". GDP does not tell the full story.
  • Last week Deloitte in London hosted the launch of a new measure of welfare designed to complement GDP. The Social Progress Index (SPI), the brain-child of a team headed by Professor Michael Porter of Harvard University, assesses 132 countries on a basket of 54 social and environmental indicators. Each country is provided with a score and rank.
  • The top rank of the SPI is dominated by relatively small, advanced Western nations. New Zealand tops the ranking, followed by Switzerland and Iceland. The UK is ranked at 13th in the world, ahead of Japan (14th) and the US (16th), but behind Germany (12th) and Canada (7th).
  • Like most other rich nations, the UK scores well on factors such as nutrition and basic medical care, as well as water and sanitation and access to education. It ranks lower than one might expect, given its GDP per capita, in the areas of personal safety (which includes levels of perceived criminality) and health and wellness (including factors such as obesity rates and life expectancy).
  • Richer countries tend to score more highly on many indicators of social progress than poor countries, but the relationship is not linear. At lower levels of income small gains in GDP are associated with large improvements in social progress; at higher levels of income increases in GDP can have a diminishing effect on social progress.
  • New Zealand ranks top in the world on the SPI, despite having a GDP per head, at $25,857, which is well below that of the other top 17 ranked nations. Conversely, Angola, Saudi Arabia and Russia score more poorly on the SPI then their GDP rankings would suggest. In general, resource rich countries are more likely to under-perform on social progress relative to GDP per capita.
  • The US is the world's richest nation by GDP but it is ranked at 16 on the SPI because of relatively poor scores on health (70th), ecosystem sustainability (69th) and basic education (39th). China and Russia score poorly in a number of areas relating to personal freedoms and rank below their poorer, and significantly smaller, neighbours in Mongolia and the Ukraine respectively.
  • Some constituents of the SPI are more correlated with GDP than others. The provision of basic human needs improves rapidly with GDP per capita at relatively low levels of income and tends to continue to improve as countries get richer. But 'opportunity' has a more variable relationship with GDP, shown by the fact that some low income countries score higher in this area than some rich nations.
  • Perhaps surprisingly, there is a weak correlation between government spending and SPI scores, suggesting that increased government spending is not a simple panacea to social progress.
  • The SPI offers a useful guide to government and has been adopted by the new government of Paraguay as a measure of national performance. The Index could also help business identify the threats and opportunities that emerging social issues pose for the private sector.
  • Like GDP, the Social Progress Index is not a perfect measure of welfare. Not all countries collect the necessary data. One can debate the constituents of the basket of indicators and the interpretation of the data. Any index is only as good as the source data that feed into it.
  • Without good measurement, it is hard to understand, let alone achieve change. The SPI provides a different and intuitive way of gauging welfare across nations. In doing so it provides a fresh perspective on the drivers of human progress.


UK's FTSE 100 ended the week down 1.4% triggered by large falls for US technology and biotech shares and worries over a potential US rate rise.

Here are some recent news stories that caught our eye as reflecting key economic themes:


  • The International Monetary Fund (IMF) forecast that the UK will be the best performing of the world's major economies this year with growth of 2.9%
  • UK manufacturing output grew by a faster-than-expected annual rate of 3.8% in February, the largest increase since February 2011
  • Greek 10-year bond yields fell below 6.0% for the first time since March 2010, as the country announced a return to international capital markets
  • The French government released a smartphone app designed to help women close the wage gap with men by boosting their self-confidence
  • Nigeria overtook South Africa as the largest economy in Africa after the government released revised GDP figures that increased the estimated size of the economy by 89%
  • Chinese exports fell for a second consecutive month, falling by an annual rate of 6.6% in March
  • Brazilian inflation rose to 6.15% in March, its highest rate in more than 11 years and close to the central bank's ceiling of 6.5%
  • A poll by the Pew Centre found that 17% of US internet users have posted online reviews of doctors or other healthcare providers they have visited
  • Researchers from the University of Michigan and Stanford have created an index to predict US unemployment based on Twitter posts about work and redundancies, which has shown a high-degree of success so far
  • Leaked documents seen by the Financial Times (FT) reveal that the World Health Organisation (WHO) plans to classify and regulate electronic cigarettes in the same way it does with tobacco
  • A technical glitch at the world's largest futures exchange temporarily halted electronic trading in corn and other commodities, with orders having to be made by floor traders rather than computers
  • The Chinese central bank imposed a ban on financial institutions handling Bitcoin transactions, in an effort to curb risk
  • The Bank of England and European Central Bank have called for the easing of "unduly punitive" rules imposed on asset backed securities, according to a paper seen by the FT
  • Vladimir Putin warned that Russia will halt gas supplies to Ukraine unless immediate action was taken to resolve Kiev's unpaid bills
  • US advertising spending on the internet surpassed ad spending on broadcast television for the first time in 2013, according to a joint report from the Internet Advertising Bureau and PwC
  • Researchers at Harvard University have claimed that babies waking up during the night to be breast-fed may be engaging in a Darwinian tactic to delay the birth of a younger brother or sister – competition policy.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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