Last month, the United Nations released its Human Development Index , which is a report that attempts to quantify the quality of life in world's nations in a way that looks beyond purely economic measures. According to the report:
The underlying principle of the HDI, considered pathbreaking in 1990, was elegantly simple: National development should be measured not only by income per capita, as had long been the practice, but also by health and education achievements.
Ranking countries by their HDI value trans- formed the development discourse and dethroned income per capita as the sole indicator of development progress.
The Economist sums up the method in more detail:
The index combines four simple measures: life-expectancy at birth; gross national income per person; average years of education; and expected years of school. First, each variable is normalised on a scale of zero to one; next, the two education variables are averaged; and finally, the index is calculated as the geometric mean of its three components.
In other words, the index is an attempt to answer the often-hard criticism that there's more to life than measures if income.
Of course, there's also more to life than aggregated numbers on life expectancy, education, and income, as well.
And, as Daniel Mitchell has often noted, these sorts of ranking schemes created by organizations like the UN and the OECD tend to be created in a way that looks good to the international bureaucrats who create them. And needless to say, these people aren't exactly known for a dogmatic preference for laissez-faire.
Nevertheless, if viewed with the proper skepticism, HDI is an interesting look into what UN researchers think is important, and how different countries stack up in this particular case.
When we list the top 30 countries ranked in terms of HDI, we find Norway at the top, Estonia at the bottom, and the United States close to the middle:
The only Western European countries that don't make the top 30 are Portugal and Andorra which are ranked at 41 and 35, respectively. Greece, which is an EU country, and traditionally considered to be part of "the West" is ranked at 31.
If we were to extend the list to the top fifty, we would also see Poland, Latvia, Chile, Hungary, Argentina, Croatia, and Russia, among others.
Where Does the United States Rank?
From what I can find, not a single major news outlet other than The Economist has commented on the new report. This may be in part due to the fact that the rankings don't lend themselves to any snappy observations about how the report "proves" that the United States is gravely deficient in some sort of quality-of-life indicator, and that all the US's problems will be solved if only it embraces more government intervention.
It is no doubt disappointing then, that the United States is not especially remarkable in the HDI. It ranks 13th between Canada and the United Kingdom. The US is two notches below Denmark and two notches above Finland.
France, Spain, and Italy, however, rank remarkably low, coming in at 24th, 26th, and 28th respectively.
It's conceivable, of course, that believers in the myth of the Scandinavian socialist utopia might point to this as further "evidence" that more interventionist states are "better off" than the supposed hyper-capitalist United States.
This supposition fails, of course, because the United States is not especially capitalist, nor is Scandinavia especially socialist.
Moreover, if having a highly interventionist state is the prescription for success, why do countries like Italy, Spain, and France rank so far below the United States? Those countries all have enormous welfare states and profligate government spending. Indeed, if the Scandinavia is our model, why does the US rank above Finland, and barely below Denmark? After all, the US's HDI value is 99%the size of Denmark's. There's really not much of a difference here between the US and the supposed promised lands of northern Europe.
"Adjusting" for Inequality
If you have a habit of reading reports like this, though, you can probably guess where this is headed.
The UN's own report points toward a very high level of quality of life in the US both in terms of education, life expectancy, and income.
However, as has become popular now among agencies like the UN, the report must be "adjusted" for inequality.
(If you're interested in how they do this, see here .)
The US is quite large and diverse (in terms of geography demographics, and more) compared to every other country with a "very high HDI." Not surprisingly, then, we find more diversity in the US than elsewhere.
The UN researchers then "adjust" for this by discounting the US's HDI score in accordance with its inequality level.
Thus, the US HDI value falls from .92 down to .79. Now, rather than being near the top, this puts the USA much farther down the list near France (.80), Hong Kong (.80), Israel (.78), and South Korea (.77).
Now, instead of being ranked 13th, the US is ranked 24th.
Of course at this point, we're reaching labyrinth-like levels of aggregation and adjustment. We've reduced every country to a single number, and then we've adjusted it further to account for inequality.
In spite of this rather improbable method of reducing numerous countries of many millions of people into a single number, rankings like these nevertheless tend to pop up in international lists of "happiest" countries or "the best country to live in."
The US Is Too Big for These Comparisons
The whole endeavor strikes me as rather suspect, especially when dealing with a country as enormous as the United States. After all, the US is, by far, the largest country in the top rankings. With 320 million people, the US isn't really comparable to even the next-biggest "very high HDI" country, which is Germany with 80 million people. Other comparisons are far worse. Norway, for example, has 5 million people, and is thus 1.5% the size of the US.
A far more meaningful ranking system would be to account for differences across political sub-units and regions, such as the US states. As we've already seen in numerous cases, such as with incomes, life expectancy, and crime, variations are quite large across states. Some US states are places where residents enjoy remarkably low crime, low mortality, and high incomes. Other states do less well.
One aggregate number of the entire US actually tells us very little.