Philanthrocapitalists propose a Social Progress Index

Measurement, in case you didn’t know it, is the new black for the aid and development community.

It’s true that innovation, as a buzzword anyway, hasn’t gone out of fashion yet and social entrepreneurship is still hot – despite the fact that few seem able to define it.  But measurement is definitely this year’s favored wrap for the hip humanitarian.

Bill Gates’ annual letter this year was all about the need for better metrics and data in the fight against poverty and inequity. Bono, dutifully following suit at a recent TED talk, said he is actually sexually excited by data now and considers himself less just an anti-poverty activist and more of a factivist.

Measurement is it, fo shizzle! Nobody who wants to be anybody in fighting poverty and injustice talks about doing anything anymore if it can’t be measured.

Last week, at the Skoll World Forum in London, came more evidence of this trend. The Skoll Foundation and their gathering of social entrepreneurs helped launch yet another humanitarian yardstick – the Social Progress Index.

And who could argue against such a thing? Who wouldn’t want to be able to quantify the impact of an aid or development project?

Answer: Nobody

The only problem is that it’s not that easy to actually measure this stuff – equality, opportunity, security, happiness and well-being.

“These are tough concepts to measure,” said Michael Green, a renowned economist in London who with Matthew Bishop, a journalist at the Economist magazine, is one of the leading proponents of philanthrocapitalism (which, like social enterprise, I also think is ill-defined … but that’s another story).

“We need a new way to measure social progress that is independent of economic indicators,” said Green, who with Bishop is proposing just such a new measurement tool with this new Social Progress Index. It’s still just an idea to test out, he said, but we’re clearly in need of a better yardstick for aid and development.

For many years, the main yardstick used by donors and development agencies to measure a nation’s progress against poverty was its Gross Domestic Product (GDP) per capita – or some economic variant of this that the experts took as a proxy for measuring progress or regress in a country’s standards of living.

Many, if not most, aid experts today agree that this didn’t work out too well since it was a gross measure, meaning it didn’t really measure what happened to individual people, and because, well, economics is not all there is to life – or measuring life. Seems obvious saying it like that now, but apparently this didn’t occur to the experts for decades.

Since that realization, many have proposed other kinds of measurements – such as the United Nation’s Human Development Index, the world inequality index (the U.S. doesn’t score well on that) or any of a variety of more targeted indices such as the health-focused Global Burden of Disease or the newly announced hunger and nutrition index.

The new Social Progress Index, or SPI, launched by a new group calling itself the Social Progress Imperative and led by Harvard business whiz Michael Porter, aims to stand out from the others by progressively refining better measures of the things that really matter to people such as food, shelter, access to education and health care as well as economic opportunity and environmental stability.

“First, it’s important to say that one of our most striking findings is that the GDP is not as bad as people think it is,” said Green. “Improvements in the GDP do create the conditions that allow countries to make social progress, but it’s not a perfect fit.”

The idea with the SPI, he said, is to create another index that can be used in tandem, or comparison, with GDP to get a more accurate view of what’s really happening to individuals and families.

All this started years ago, Green said, at a gathering on the periphery of the World Economic Forum in Davos, Switzerland, where he and Bishop were among a group of folks discussing the need for some way to better measure true, comprehensive social progress.

“We are interested in creating an index to better tell us how GDP relates to human progress,” Green said. “We need to create a measure that is completely independent of economic indicators and look at how the two of them (GDP and the SPI) interact.”

For the first phase of the Social Progress Index, 50 countries were selected for evaluation and — probably to nobody’s surprise — Sweden did really well. Britain, Switzerland, Canada and Germany scored above the United States. Norway wasn’t listed, which I assume (as someone of Norsk extraction) means it wasn’t evaluated for this round.

Interestingly, Rwanda — which is often considered the development community’s big African success story — ranked near the bottom of the list. Mozambique, Uganda, Nigeria and Ethiopia were the only nations with lower scores.

How could this be, I asked Green, if Rwanda is supposedly our shining example of social progress in Africa? On the SPI website, the organizers acknowledge this counter-intuitive finding with a post that begins: “Rwanda’s position at 46 in the Social Progress Index belies a story of unprecedented progress” noting the tiny nation is the only country in sub-Saharan Africa on track to meet all of its health-related Millennium Development Goals (read more about that here).

“We found some weakness in our analysis of Rwanda,” said Green, emphasizing again that the SPI is going to be refined over the next few years. “It’s going to take a few years for all this to shake out.”

Green said their new proposed tool for measuring social progress is based in part on the ideas of Nobel laureate Amartya Sen, an Indian economist and philosopher who has, among other things, championed the idea that personal and political freedoms are critical for making progress against poverty. The SPI ranks countries based on three categories – basic human needs; foundations of well-being; opportunity – each of which are broken down further into four categories. Go to the Index at this link for interactive description.

It’s not clear how well this new yardstick can measure things like Sen’s idea of freedom, or equality for that matter. Green said the index does not include country measures of the gap between rich and poor, even though many experts would say that’s a fairly critical measure of social progress (or the lack of it).

One of the more interesting findings, he said, is that as countries become wealthier the SPI indicates they also become increasingly less sustainable from an environmental and natural resource perspective.

“You also see less social progress in high-income countries with increases in GDP than you do in low-income countries,” Green said. In other words, he said, improving GDP generally improves the lives of people in poor countries but has a decreasing impact on social progress in wealthier countries.

“We’re just starting on this but we’re already finding an incredible richness to this index,” said Green.