Introduction

One of my favorite academic quotes comes from an economist, Robert Lucas, who said, “Once you start thinking about [long-run economic] growth, it’s hard to think about anything else.” Coming from a minor in economics myself, I can attest to the truth of this statement: One needs only to consider the near-infinite gap between a Wall Street shark and a subsistence farmer to see how rapid economic development has led to a reality which would be virtually incomprehensible to someone just a few hundred years ago. This leads me to wonder what lies beyond the edge of our own horizons now, not far out of reach yet invisible to us. Furthermore, how can we accelerate the journey there?

This is a philosophical and economic question which, ultimately, probably doesn’t have a single satisfying DIY hack. That being said, economists have reached a consensus on a common measure to track a country’s place on that track: Real GDP per Capita. GDP, or Gross Domestic Product, is a complex figure, but essentially, it measures the value of all goods and services produced in a country in a given year. Real essentially means we adjust for inflation so that the value we measure is consistent across any given year. And, Per Capita simply means that we divide Real GDP by all the people in a country, giving us an approximation of the value of the goods and services available to each citizen in a country in a given year. The ideas is this: As Real GDP Per Capita increases, each person has more value available to them, increasing quality of life. Furthermore, for Real GDP per Capita to increase, the quality or quantity of the goods and services available to a person must improve, which generally means we associate an increase in Real GDP per Capita with increased access to technology and innovation. In fact, technology and innovation is considered the primary mechanism for growth of Real GDP per Capita in a country that has established free and fair markets. So, bingo, right? Innovate, improve Real GDP per Capita, repeat. Soon, you might be thinking, your country is on its way to interstellar travel and black hole guns! Unfortunately, not exactly.

Before we go further, I want to clarify that this is not to say that countries with low Real GDP per Capita are in any way inferior. Oftentimes, countries which have low Real GDP per Capita today were exploited to allow for the development of countries with high Real GDP per Capita, severely disadvantaging these countries. More importantly, Real GDP per Capita is a narrow measure that can fail to capture the essence of what progress really is. Let’s go back to my example at the beginning — The Wall Street Shark versus the Subsistence Farmer. It isn’t just computers, TVs, and luxury that lie between the two. It is also voting rights, due process, health care, vastly increased equality, and countless other social measures. Point is, progress isn’t just technology and wealth. Of course, economists have a counter to this I will explore, but for now, I think you are prepared to dive in into the different measures of progress of a country, as well as the pros and cons of these metrics!

The Inherent Flaws of Real GDP Per Capita

First, let’s hone in on Real GDP per Capita in a vacuum, without comparing it to other popular candidate trackers of progress. We will be using data from 2023 to ensure that information is up to date, but fully updated as changes do come in for several months after the target period. Because we will be using data from one year, we can use regular GDP Per Capita, as we don’t need to worry about inflation across years. As you can see, the distribution of GDP per Capita across countries is severely skewed:

Alt text: A density plot showing the heavy right skew of GDP per Capita, with extreme values stretching as far as $240,000, while the majority of countries are less than $20000, demarked by a vertical line representing the median.

This skew is so severe that, usually, we use a log scale for GDP per Capita when graphing, which reduces the already limited intuition it gives as a number. However, I wanted to highlight this skew because, as it turns out, the exact countries which popularized GDP per Capita as a measure are the ones who, at the time (and still today), rested at the extreme higher end of the scale. For instance, Robert Solow, an American economist, used it heavily in his model of long-run economic growth which he ultimately won the Nobel Prize for. This doesn’t invalidate GDP per Capita by any means (After all, to have the privilege to study long-run economic growth your country needs to be somewhat developed already), but that certainly suggests there could be some slight bias: I doubt many scholars are keen to say their home country is less developed than another. Furthermore, this skew means that GDP per Capita alone lacks a lot of nuance for the vast majority of countries. 50 percent of countries have a GDP per Capita less than $8000—There isn’t a lot of room for clear distinction between progress there. As mentioned above, there are transformations to GDP Per Capita we can do to better capture relative development across countries, but it is worth mentioning.

The Argument for Real GDP Per Capita

As I mentioned, there are many proponents for Real GDP per Capita. One reason for the support is that, despite the narrow focus of GDP per Capita, it is strongly correlated with essentially every notable measure of nationwide healthcare progress one can imagine. If a country has a relatively high GDP per Capita (Or equivalently, log of GDP per Capita), it almost certainly has a high life expectancy, low infant mortality, high vaccination rates, etc. For example:

As you can see, both Log GDP per Capita and GDP per Capita have strong relationships with the overall health of a nation, and even public resource access. Secondarily, note that although Log GDP per Capita may be hard to interpret, it does truly create a much more workable scale and structure to the relationships. In this way, there is a tradeoff between transforming or not transforming Real GDP per Capita.

Anyway, as these tight associations show, Real GDP per Capita also isn’t all technology and wealth. It is, economists argue, a cohesive measures whose increase eventually necessitates improvement in all parts of a society, not just in its markets. To demonstrate, innovation and wealth, the driving factors of Real GDP per Capita, require public resources to allow for fluid class mobility, thereby consistently churning up new talent. This means that a higher real GDP per Capita is generally associated with increased Public Resource Access.

Adding on to that, through innovation and wealth comes improved medical technology and accessiblity of that technology, improving life expectancy and infant mortality. Higher wealth means that opening care facilities in rural areas becomes viable, also improving life expectancy and immunization rates.

Real GDP per Capita isn’t just linked to health statistics or public resource access either. It generally tends to align with our internal notion as to which countries are developed and developing. To look at the progress of a country over time, economists tend to look at the percent growth in Real GDP per Capita each year. A country which shows consistent growth over several years tends to show real socioeconomic evolution, and countries which have experienced that consistent growth in the past fifty years tend to be judged as “more developed” by casual observers. For instance (Note that not all countries have data for every year):

As this animated graphic reveals, countries which one might consider socioeconomically developed today, such as our own United States, show consistent, moderate growth over the entire time frame, barring major recessions. Countries which one might consider less socioeconomically developed, such as the Democratic Republic of the Congo, have inconsistent growth patterns, often fluctuating between extreme negative and extreme positive swings in their Real GDP per Capita. These extreme values are because the Real GDP per Capita in these countries is very low (often less than $500), so slight fluctuations in economic conditions can cause significant percent changes. The reason for this stagnation is complicated and controversial, and is probably linked to past and continued exploitation of these countries for resources by richer countries, governmental corruption, and war. Crucially, it is not because these countries are “less than”. Nonetheless, it is undeniable that consistent growth of Real GDP per Capita is linked to countries which most people consider to be “first-world”. This is because consistent growth compounds, allowing individual wealth to skyrocket.

A Major Hitch in the Road for Real GDP Per Capita

One of the major problems with Real GDP per Capita is that it is a mean. While I will avoid needlessly complicating things, know that Real GDP per Capita is very closely linked with average household income. With that in mind, consider that the income distribution in essentially every country is heavily right skewed, which is to say that Real GDP per Capita often overestimates the dollar value available to each person in a year. In layman’s terms, Real GDP per Capita completely sidesteps the issue of income inequality, and because of that, often overstates the quality of life for most people in a given country. Worst yet, increases in Real GDP per Capita is not obviously linked with reductions to income inequality. To explain, let me first clarify that we will be looking at the percent of national income held by the top ten percent of the country. This is a measure of wealth inequality, as for every additional percent of income the top ten percent obtains represents a percent loss of income held by the bottom ninety percent (And a widening of the class gap). With that definition behind us, allow me to demonstrate:

As you can see, despite Real GDP per Capita increasing steadily in the United States, which economists would hail as a sign of steady progress, income inequality is, at best, static, and at worst, increasing. To make matters worse, consider that as National Income increases (which it was in this period), even if the share held by the top ten percent is constant, the dollar amount bridging the class divide is widening (inflation adjusted). In other words, Real GDP per Capita is in no ways a good measure for income equality in a country, and may even have a negative association with income equality.

As a counter argument, economists argue that “a rising tide lifts all boats”. That is, if a country is performing well and Real GDP per Capita is rising, everyone will capture some amount of that additional value, even if it isn’t the “fair” amount. Also, they argue, some level of income inequality is necessary in a competitive economy. If there is no reward for innovation, then innovation will stop, and ultimately so will Real GDP per Capita growth. Nonetheless, most agree that rising income inequality is a stark reminder progress isn’t always universal to the citizens of a country.

Now that we have thoroughly explored Real GDP per Capita, let’s consider different measures. As a country develops, there is increased opportunity for large, centralized business endeavors, leading to increased real estate development and eventually the formation of urban areas. These cities tend to produce higher value goods and services, and therefore higher incomes, promoting migration there. This movement is so significant it has its own name: Urbanization. Urbanization is often debated as its own indicator of progress, or development, of a nation. Perhaps it could even serve as a substitute to Real Per Capita GDP? After all, urbanization is easily understood (We will look at the percent of people in a country living in urban areas), as opposed to Real GDP per Capita, which, as discussed, can be awkward to work with.

Urbanization as a Measure and Source of Progress

Urbanization is often cited as evidence of the productivity and efficiency of a country. When more of a country is living in the center of a city, transportation costs plummet, especially with adequate public transportation. Goods and services are more readily accessible, reducing their costs and thus making them available to a wider range of socioeconomic classes. The high density means public resources can be economically viable for governments, promoting equity and class mobility. Furthermore, this high density means that people are able to specialize as they don’t need to be responsible for each of their basic needs, allowing for people to become experts in various fields, thus improving the productivity of everyone.

Take electricity as an example of this phenomenon. A densely packed urban population makes an electric network feasible and less costly per person, thus meaning once a wealthy few have invested in its development, it tends to explode across the entire city. This not only means individual homes have access, but areas for public congregation do as well, thus making electricity somewhat of a publicly available good (improving class equality). And, it is probably of no surprise to you that when people have access to electricity, their productivity skyrockets. Cooking, cleaning, and heating become magnitudes faster, and not only that, but safer. On the other hand, when a country has yet to urbanize, people are far apart and often forced to entirely support themselves. This means that even if someone does invest in their own electricity network, it becomes incredibly costly to provide that to others. These are costs those living in rural areas often can’t pay, as they tend to be living off their own land. Let’s look more closely at the relationship between electricity access and urbanization (2023 data):

Alt text: A proportional stacked bar graph with the x axis containing quartiles indicating the percent of the country that is urbanized. Each bar is filled based on the percent of the countries in that urbanization bin which have Universal Electricity Access versus those with Middling or Inconsistent Access. The chunk encoding Universal Electricity Access gets larger for each bar, until reaching the 75-100% Urban bar, where more than 90 percent of countries have Universal Electricity Access.

As can be seen, a country urbanizing is inextricably linked with it obtaining universal electricity access, and thus is linked with that country exponentially increasing productivity and efficiency. That being said, urbanization has its own, immeasurable problems, both as a measure and as a process. Urbanization leads to increased use of public goods, which generally reduces the overall environmental toll per person. However, the actual, specific location of urban areas tend to be environmentally devastated. Furthermore, high population densities means these urban areas have to rely on imported food goods. In some cases, these goods are imported from countries which are supposedly “less developed”, in terms of Real GDP per Capita or Urbanization percent. Therefore, to say that each country should urbanize as much as possible is unsustainable, as urban areas often can’t be entirely self-sufficient. Also, not all urban areas are created equal. There are many cities where the high population density has led to slums, a breakdown of sanitation infrastructure, and thus, outbreaks of disease.

More so, urbanization as a metric has some problems. Even if urbanization as a process had no issues, the metric itself is less cohesive the Real GDP per Capita. Urbanization is generally a good measure for the type of economy a country has (More urban countries are oriented towards providing services, rather than producing goods), productivity, and access to public resources which contribute towards class mobility. However, most economists agree urbanization does not tend to capture health of a nation, gender equality, private property rights, or governmental corruption well — Or at least, not as well as Real GDP per Capita does. So, are we back to square one?

Alternative Indicators of Progress: Birth Rate

Not exactly! There are plenty of more niche measurements which capture development, or at least, an important part of development. One of the more interesting ones is not the death rate, but, actually, the birth rate. We tend to see an association with development and the birth rate of a country for three main reasons:

First, countries which are very undeveloped tend to have a large portion of the population living in a subsistence, or close to subsistence, lifestyle. People living in such a way often want to have as many kids as possible to literally help around the home. Secondly, countries which are less developed in regards to education, and particularly sex education, tend to have much lower rates of birth control usage. Thirdly, and most significantly, more developed countries in regards to gender equality make independence and higher education much more accessible to women. And, trends show that when women are given the opportunity to pursue such paths and rightfully focus on themselves, they become less likely to have children.

This may seem convoluted, but let me prove it! To give some context, we will use the CPIA, or Country Policy and Institutional Assessment, ratings for gender equality in countries. The CPIA ratings are annual assessments which are used prominently in the World Bank’s allocation of fiscal aid each year. The following data are from 2023:

Alt text: A box plot which shows the gender equality rating on the x axis, with the values “Low”, “Medium”, and “High”, with the y axis being assigned the Birth Rate. The points for each level of rating are also showed. The box for “Low” is short, with the quartiles being between 30 to 40 births per thousand people. The box for “Medium” is quite large, with the quartiles being between 20 and 32 births per thousand people. The box for “Large” is following a similar distribution to “Medium”, but is much more clustered. In general, the boxes get lower, indicating lower birth rates, as the gender equality rating goes improves.

As you can see, although the relationship isn’t perfect, countries with high or medium ratings for gender equality almost always have significantly lower birth rates. However, the birth rate is not a perfect measure of progress for a few reasons, nor is a Gender Equality Rating an amazing response variable. First, a birth rate has a lower bound: A country literally can’t have a birth rate below 0, and barring immigration, this country will quickly disappear if it does. This means that birth rate offers diminishing returns in measuring upper development. Next, and more importantly, data are very hard to collect. One benefit of GDP per Capita is it is established and relatively easy to measure. Things like birth rate and gender equality ratings are harder to measure, and are prone to measurement error. In particular, gender equality rating leaves room for subjectivity and bias. Moreover, oftentimes, a country wherein citizens face the most severe realities are also much harder to measure, meaning we tend to lack these measures for the countries with the most immediate opportunities for growth.

Also, birth rate as a whole isn’t a perfect measure conceptually. As I hinted at above, a country with a very low birth rate might be educationally developed, but can face major disruptions to the livelihoods of its citizens. Take a country like Japan: It is extremely technologically advanced, but has such a low birth rate that, at times, the population is declining. This means that Japan has what is known as an aging population, where people are advancing into old age faster than young people can fill their roles. Therefore, the reduced population of young people have to bear a heavier burden in supporting welfare programs. Eventually, this way of life just isn’t sustainable, and the weight of the economy could collapse on itself. In this way, birth rate is, similar to urbanization, measuring a facet of development, but not all of it.

Therefore, let us turn to our final alternatives: Those aforementioned CPIA ratings.

Alternative Indicators of Progress: Intangible Ratings

These CPIA ratings, admittedly, can be biased and hard to measure. On the other hand, most people agree that they are getting at the most “direct” measures of development. To explain, when most people think of measuring development, they don’t want a proxy. Birth rate, for instance, is a proxy for educational development. People want to attack the source of development, not measurements associated with those sources.

These ratings also touch on more intangible parts of development (As with measures like the CPIA Social Inclusion Rating). Many agree that, intuitively, development isn’t just economic progress or living in cities or having less babies, but also things like happiness, equality, and freedom of expression. Economists, of course, argue that GDP per Capita is associated with these things. This opens up the classic debate: Does money buy happiness? Freedom, even? I won’t touch on that extensively here, as this is more of a psychological debate beyond the scope of this argument. Even if it did, we are back to the original problem of getting to the source, rather than working with proxies.

The point is, those studying development from a non-economic lens want a more direct measure that attacks the intangibility of development. These CPIA ratings are not the only metrics which attempt to do so, but they are notable ones. There are also similar ratings collected by various international organizations which have constructed metrics including the National Happiness Index, the Gini Index, and more. One common critique of these measures is that they often rely on surveys, which can be affected by cultural differences, not absolute development differences. For instance, a person in a more conservative country may be more likely to say they are “Very Happy”, even if, in fact, they are just as happy as someone in a country with more freedom of expression. This challenge is a major flaw of these metrics.

Either way, let us explore these intangible ratings, using data collected on each country in 2023. If a country’s data could not be collected, we will mark that as “No CPIA”, else we will mark the presence of data as “CPIA”. The CPIA ratings are measured in bulk, so if a country has one CPIA rating available, it has all of them, and vice versa. If you focus on the lack of data, you will be shown a tree map which shows the number of countries with CPIA data versus those that don’t, sub-categorized by the development indicator you choose. First, notice that each rating has extremely limited data, with most countries not having data. Although the CPIA did focus on countries which had the most room for improvement, there are certainly several countries which are less developed we still have no data for (As measured by the relevant metric of progress selected). This is a consequence of using intangible measures whose calculations are somewhat abstract and require various data from a country which sometimes can’t be collected or won’t be allowed to be reported.

That being said, for the data that is available, we can focus on how these countries CPIA ratings relate to one another and other measures of progress using an alluvial plot. Notice how all these ratings tend to be somewhat related to one another, where countries which excel in one area tend to excel in others, and that furthermore, these countries tend to also be associated with high levels of development in the metrics of progress we have already discussed.

As you can see, these ratings confirm, at least to some extent, what economists argue: Our more concrete indicators of development are strongly associated with more abstract ones. So, where do we go from here? We have so many different measures of progress, but which is the best? Which should we move forward with?

The “Best” Metric

In the end, there is no best measure of development. As I have been demonstrating, each metric has its pros and its cons. In general, a metric tends to trade interpretability for ease of collection and cohesiveness. In this way, the best solution isn’t to rely on any one, but instead, to look at the broader picture. Use urbanization to tell us about efficiency, birth rate to tell us about gender equality and educational development, and GDP per Capita to tell us about the overall story. Then, we should link it all back to reality by ensuring the CPIA ratings and other more intangible ratings align with our assessment of a country’s development.

However, crucially, it is important to remember that these are metrics, not milestones. In economics, we call this Goodheart’s Law: “When a measure becomes a target, it ceases to be a good measure.” For instance, if a country attempts to increase GDP per Capita at all costs, such as by mandating higher education, it neglects all the other aspects of progress and exacerbates the divide between GDP per Capita and how actually developed that country is. Or, if a country focuses only on boosting the happiness rating of citizens within its country through social programs, a country can be sent into spiraling debt. The point is, just as a runner trains to enable longer runs, not to lower their heart rate, a country should aim to make itself the best it can be, and the metrics we have discussed will follow suit to reflect this progress. The reverse is not necessarily true.

This is even more true when considering the wide ranges of populations and geography for nations across the world. Island nations face major problems with transportation infrastructure, for instance, whereas countries in Northern Africa tend to see problems with governmental instability. What should be the focus of one country should not be the focus of another, and this is yet another reason why there is no “One size fits all” metric.

The Good News

I have gone over a lot of dense material, but at the beginning, I alluded to a much more simple notion: Wanting to know where we will go, based on where we have come. Now, I have no idea what the future lies, but I can say that I truly believe it is very bright. To explain, consider how quickly the world has developed in just the past 70 years. In less than a lifetime, computers and the Internet have revolutionized the way we live (This project would literally not exist without it). Transportation has become multitudes faster, safer, and more accessible. Leaps in medicine have allowed us to live longer and healthier lives. Sometimes, people might ask you, “If you live in any time period, what would it be?”. History interests aside, the correct answer is unequivocally now. The lifestyle of people living just 10 years ago, where computers were blockier, slower, and ChatGPT-dormant, is unimaginable to most university students. To demonstrate just how far we have come, let’s just consider advancements in one of the most basic of human needs: That of living.

The following animated scatter plot of countries shows just how rapidly human life expectancy and death rate have each improved over time for most countries. Each of these represents massive leaps forward in the quality of life for everyone in that country, and ultimately, as this trend is nigh universal, the world:

Alt text: A scatter plot of life expectancy in years versus death rate per 1000 people. Death rate’s axis goes from 0 to 50, whereas life expectancy goes from 10 to 100. It is clear that the two have a strong linear association. More importantly, as an animation is played, starting from the year 1960 and ending in 2023, the points steadily migrate to the top left, indicating very high life expectancy and very low death rate.

Without loss of formality, this plot is so exciting for me! The consistent march of the points into better outcomes for everyone is refreshing in a world where we often only hear about doom and gloom. Try to imagine how inconceivable this era of long lives and few deaths (relatively) would be to someone in 1960. To me, this shows that, regardless of the metric, humanity is steadily marching ahead. Then, I realize that I am, at this very moment, in the position of someone in 1960, but instead of looking forward to 2024, I am trying to imagine 2100. Far away, but yet, not that far.

In this way, I present this conclusion: I do not know what lies beyond humanity’s current horizon, but I do believe that we are accelerating towards it every day, faster than most can imagine. I, for one, cannot wait till we arrive there.