1|Page

REFORMING INDIA’S GOAL POST- “SOCIAL PROGRESS INDEX (SPI)”

SAHIL AGARWAL
16HS20051

2|Page
Index:

S.No. Context Pg.No(s)

1. Introduction: The Social Progress Imperative 3

2. The Need to “Measure” Social Progress 4

3. Conceptual Architecture of the SPI 5-6

4. Construction Mechanics & Methodology 7-9

5. Assessment & Analysis 10-13

6. Organizational Applications & Insights 14

7. Conclusion 15

8. Appendix 16

9. References 17

Total No. of Pages - 17

Word Count - 2890
Design Specifications Matrix-

S.No. Hierarchical Nature Font Font Size

1. Primary Content Euphemia 11
2. Formulae (Secondary Content) Calibri Math(default) 11
Graphs, Flowcharts Euphemia 11
4. Tertiary Content Euphemia 8

3|Page
 Introduction-
Economic Growth vs. Sustainable Development- The case for Social Progress Index

“If all the world’s people lived like people in the developed countries do, then we would
need 4 different globes to support the demand in terms of natural resources. Unless,
something is done to change the way we treat our planet, the planet’s resources will not
sustain, which means that the issue of sustainability belongs to everybody…” –UN Under-
Secretary General, Mr. Wu Hongbo.

The traditional economic thought, concerned primarily with efficiency, perfect markets and
market forces, as well as marginal decision making with self-interest orientation led to the
formulation of such development strategies, that not only dismissed the importance of non-
economic variables (values, social progress, local history, environmental impact and
externalities) but also came at the expense of societal development by blindly focusing on
“rapid industrialization aimed at GNP growth at all costs”. However, progress on social and
environmental issues does not automatically accompany economic development. Too many
people- regardless of income- live without full rights and experience discrimination or even
violence based on gender, religion, ethnicity or sexual orientation.
Therefore,

We need to understand when and how economic development advances social progress
(and when it does not).

Since the financial crises across several parts of globe, and the failure of economic growth to
‘trickle down’ as holistic development, citizens are increasingly thriving for improvements in
their lives, thereby making “Social Progress” a critical agenda for leaders in government,
business and civil society. But, one cannot change things by simply fighting the existing
reality. We must build a new model that makes the existing model obsolete and drives
change through the hearts and nerves of citizens and their citizenry.
This is the imperative for a Social Progress Index.

Why we need to “measure” Social Progress?

4|Page
 “Measure progress to make progress, because what gets measured…gets managed.”
- Peter Drucker.

As a complex set of goals and targets, the 17 Sustainable Development Goals (SDGs)
intrinsically pose numerous challenges in regard to its implementation, and consequently
achievement.
Clearly, traditional measures of national income such as real GNP per capita (PPP adjusted),
fail to capture the overall progress of societies.
How can the SDGs be translated into specific actions for the states, cities, districts and
communities of a vast and diverse country like India?
The Social Progress Index aims to meet this pressing need by creating a holistic and robust
measurement framework for national social performance that can be used alongside
economic indicators, by the strategists and leaders as a tool to benchmark success, improve
policy and catalyze action.

(Source: Social Progress India & Institute for Competitiveness, India.)

The Social Progress Index solves 3 critical challenges faced in the implementation of SDGs.
1. The Measurement Challenge: Not more than 70 among the 200+ SDG indicators can be
rigorously measured for most of the states in India. The SPI India uses 55 indicators to
provide a comprehensive estimate of SDG performance even where the formal indicators do
not exist.
2. The Aggregation Challenge: Unlike the SDGs, which are by definition a list of goals rather
than an overarching model, the SPI is a conceptual model of a composite indicator that has
been designed to allow aggregation using econometric techniques to select and weight
indicators.
3. The Localizing Challenge: The Social Progress Index can be adapted to any level of
geography and any sector, ranging from communities to metropoles to public institutions to
local businesses. This is important since much of the effort on SDG implementation will take
place at the sub-national level and will require local deployment to track performance.
Moreover, due to its comprehensive framework, the SPI can be easily understood by diverse
stakeholders, hence facilitating ‘cross-sectoral stakeholder engagement’ (i.e. allows different
strata of people to join hands and work things out!)

Conceptual Architecture of SPI:

Social Progress is defined and operationalized through a rigorous multi-layered framework

of principles. The 4 design principles are the conceptual foundation for defining social

5|Page
 progress, choosing its dimensions, components & appropriate indicators, and measurement
mechanism.

1. Exclusively social and environmental indicators

Unlike prior efforts (such as HDI) where social and economic indicators are “comingled”,
in a way that makes it difficult to disentangle cause and effect, SPI exclusively and
directly (i.e. without economic proxies) measures social progress. The economic progress
is measured separately via measures such as ‘Real GNP per capita (PPP adjusted)’, ‘Gini
Coefficient’ and other economic indicators. This would allow a systematic analysis of the
relationship between the economic and social development.
2. Outcomes and not inputs
Input indices look at a region’s policies that are believed to lead to an outcome; Output
indices on the other hand directly measure the outcome of those policies. SPI has been
designed to aggregate output indicators.
(E.g. SPI measures the educational attainment and life expectancy of people rather than
the money spent on education and healthcare.)
3. Holistic and Relevant to all societies (whether rich or poor)
SPI strives to create a holistic measure of social progress that encompasses a
comprehensive view of the health of any society, unlike previous measures which
focused mostly on the pressing issues of less developed countries.
4. Actionable
The outcomes are measured in a ‘granular’ way that focuses on specific areas that can be
acted on directly by leaders and practitioners in government, business and civil society
implementing the programs and policies.
______________________________________________________________________________

Social progress is thus defined as,

“ the capacity of a society to meet the basic human needs of its citizens, establish the
building blocks that allow citizens and communities to enhance and sustain the quality
of their lives, and create the conditions for all individuals to reach their full potential”

(Source: Social Progress Index: States of India, Methodology Report, 2005-2016)

6|Page
 The SPI is built around 3 layout elements: Dimensions, components & indicators.
 Dimensions represent the broad concepts that define social progress.
 Within each dimension there are 4 distinct but related concepts that together
make up each dimension.
 Each component is composed of multiple independent outcome measures
(indicators) that measure as many valid aspects of the component as possible.

(Source: Deloitte & Social Progress Imperative)

7|Page
Construction Mechanics & Methodology of SPI in Brief-

While the broad categories examined in any social progress index are same as the Global Index,
but the indicators underlying each component vary, depending upon the availability of data for
the particular index for the particular region (country, state, city, district or community.)

Step 1: Indicator Selection and Data Collection

(Source: Stern.et.al (2017) Social Progress Imperative)

Note: The detailed list of 55 indicators & definitions have been included as Appendix.

8|Page
All the data used in the Index is compiled from government sources, or from sources endorsed
by NITI Aayog, therefore it is the most reliable data available. In a number of cases, however,
when the data for certain states is missing for particular indicators, they are completed by
imputation methods.

Step 2: Dealing with Missing values

The missing value imputation for any indicator is usually done by one of these ways:
a. Extrapolating historical data
b. Interpolating recent data
c. Using all-India average or average of selected peer states.

Step 3: Data Transformation and Standardization

Indicators being measured in different units require standardization to make them comparable.
Standardization rescales the indicators so that they have a mean of zero and variance of one.

Step 4: Estimating the Fit

First, Exploratory Factor Analysis is used to test the underlying factors among the set of selected
indicators in each component. In this process, the indicators that are statistically incompatible
are removed.
This is followed by calculating the Cronbach’s Alpha for each component to measure the
internal consistency between the underlying indicators (i.e. whether or not the indicators
measure the same concept.) The alpha value should be above 0.7 for any logical grouping of the
indicators in the component.

Step 5: Aggregation
The Principal Component Analysis is used for computing the weights of the indicators within a
component. The component value is then computed as a weighted sum of the standardized
indicators.
𝐶𝑜𝑚𝑝𝑜𝑛𝑒𝑛𝑡(𝑋𝑗) = ∑(𝑤𝑖 ∗ 𝑖𝑛𝑑𝑖𝑐𝑎𝑡𝑜𝑟)

Now, the values are transformed to a 0-100 scale, using the best and worst case scenario(not
always the lowest theoretical value e.g. Child mortality), to arrive at the component score as
follows:

𝑋𝑗 − 𝑊𝑜𝑟𝑠𝑡 𝐶𝑎𝑠𝑒
𝐶𝑜𝑚𝑝𝑜𝑛𝑒𝑛𝑡 (𝐶𝑗 ) =
𝐵𝑒𝑠𝑡 𝐶𝑎𝑠𝑒 − 𝑊𝑜𝑟𝑠𝑡 𝐶𝑎𝑠𝑒

Subsequently, the dimension indices and are calculated:

(Each component is given equal weightage due to the absence of any theoretical or empirical
proof to weight any component higher than the others.)

This is followed by calculating the SPI score with equal weightage to each dimension, under the
assumption that each of them reflect equally important aspects of life.

9|Page
 1
𝐷𝑖𝑚𝑒𝑛𝑠𝑖𝑜𝑛 𝑖𝑛𝑑𝑒𝑥 (𝐷𝑖 ) = ∑ 𝐶𝑗
4
1
𝑆𝑃𝐼 = ∑ 𝐷𝑖
3

Sensitivity Analysis:

Sensitivity Analysis is performed to assess the stability of scores/rankings with respect to

changes in the framework. To consolidate the assumption that each component is of equal
importance, the effect of removing one component at a time is tested. High differences between
‘the rank with all components’ and ‘the modified rank with one component missing’ is supposed
to indicate a stronger contribution of the component to the overall SPI score/rank. As shown in
the figure below, in most cases, the rank doesn’t change by more than 10. (Exception: Personal
Rights and Access to Advanced Education, which seem to influence the SPI more than other
components. However this result can be attributed to the ordinal nature of the indicators
underlying these 2 components, rather than any violation of ‘equal weightage’ assumption.)
Change in Rank

Info& Comm.

Environment

Freedom &
Basic Health
Nutrition &

Sanitation

Basic Edn.

Adv. Edn.
Access to
Access to

Access to

Personal

Inclusion
Water &

Personal

Quality
Health
Shelter

Choice
Rights
Safety
Care

(Source: Global Social Progress Methodolgy Report (2017))

Assessment & Analysis:

The analysis of SPI scores can be done on the following levels-

10 | P a g e
 ("How much behind the ("How well compared to
best case scenario?") its economic peers?") (“How has
it performed
over time?”)
("How much of income
translated into
progress?”)

 Absolute SPI Scores are based on a realistic (rather than purely theoretical/abstract) 0-
100 scale, which allow us to track the absolute performance of the country/state over
each component over time in relation to the best and worst score possible.
“Very High Social Progress” – Scores greater than 62.18
“High Social Progress” – Scores between 56.64 and 62.17
“Middle Social Progress” – Scores between 53.51 and 56.63
“Low Social Progress” – Scores less than 53.50

(Source: Times of India)

 However, the absolute scores do not distinguish between states/countries with very
different economic state. (E.g. A state may score low on SPI but is still better off
compared to other states with similar GDP per capita, whereas a state may score high on
SPI but is still low as compared to the SPIs of states with similar GDP per capita.) Hence
we also assess the relative performance.

11 | P a g e
 There are 3 steps involved in determining a state’s/country’s relative strength or
weakness:
1. First, a “peer group” is defined for each state/country. A state’s economic peers are
defined as the 10 states closest in GDP per capita.
(For e.g. West Bengal Arunachal Pradesh, Meghalaya, Mizoram, Jharkhand,
(Based on 2017 GDP data) Rajasthan,Chattisgarh, J&K, Andhra Pradesh, Karnataka,
Madhya Pradesh.)
2. Now, the “median” social progress scores are calculated for the peer group (overall
and dimension, component, indicator wise too.) (Note: The median is used to minimize
the effect of outliers)
≥ 𝑚𝑒𝑑𝑖𝑎𝑛 + 1𝜎𝑎𝑣𝑔,𝑚𝑒𝑑 : (relt.) over performance
3. If the state’s abs. score ∈ 𝑚𝑒𝑑𝑖𝑎𝑛 ± 1𝜎𝑎𝑣𝑔,𝑚𝑒𝑑 : (relt.) neutral performance
≤ 𝑚𝑒𝑑𝑖𝑎𝑛 − 1𝜎𝑎𝑣𝑔,𝑚𝑒𝑑 : (relt.) under performance
(Note: 𝜎𝑎𝑣𝑔,𝑚𝑒𝑑 is the average absolute deviation about the median)
 Having compared the performance of states on a cross-sectional basis, we can also
compare their longitudinal performance(i.e. performance over time.) However, limited
data availability over the past 8-10 years for several Indian states inevitably postpones
such a comparison as a futuristic exercise. We can still nevertheless, project the country
level trend:

 We find that social progress has improved in the country, however on a very slow pace
of 8 points in the past 11 years. Further, Average performance is better on components
of Basic Human Needs and worse on components of Opportunity, reflecting that
creating an equal society for all our citizens continues to remain an elusive goal to
pursue and achieve.

12 | P a g e
 (Note: Graphs of dimension and component wise variation over time have not been included, given the project size
constraints.)

 The SPI (being measured independently of any economic indicators) unlike any indices
till date, provides an analysis of the relationship between social progress and economic
success. The state wise SPI relationship with NSDP (Net State Domestic Product) per
capita is as follows:

(Source: Discussion paper on Social Progress Index and States of India, 2017)
(Note: Due to the size limit on project, the dimension and component wise relationships of the state’s SPI with NSDP
although insightful, but have not been analysed here. They can be found in “SPI States of India: Results Findings” )

 We find 3 key observations-

1. There is a strong and positive correlation between economic growth and social
progress.
2. The relationship is not linear. It can be shown that the relationship between NSDP and
log (SPI) is however linear, implying thereby that: At lower levels of income a small
change in NSDP per cap. leads to great advancements in social progress but the change
is nearly inelastic at high levels of NSDP per cap.
3. Despite the correlation, there is a large amount of variability implying that economic
progress alone doesn’t explain disparities in social progress.

The People’s Report Card

The Social Progress Imperative partenered with the Global Citizen to create the “People’s
Report Card” , a tool to track the progress of the nation on achieving the Global Goals.
This report card provides the citizens of the nation with the means to hold their leaders

13 | P a g e
 to account for such underperformances and incite them to make better policies,
implementations and hence development.

(Note: The precise breakup of scores in different indicators, and state wise scores & breakup have not been analysed
owing to the project size constraint of 3500 words.)

A Glance on Potential Organisational Uses of SPI

The Social Progress Index is relevant and useful to many stakeholders, many of which:
 Use the results to convene governmental officials, business, nonprofits, citizens and
others to define long-term social progress goals and a country’s immediate needs.
(Source: NITI Aayog Publication, Institute of Competitiveness, India)

14 | P a g e
  Use the results in organisational decision making such as
a. Designing programs and policies
b. Directing investments and assessing risks
c. Assess progress towards the complementary SDGs.
(Source: Deloitte, “The connection between social progress and FDI” )
 Use the results to forge new partnerships and catalyze innovation.
 Evaluate and share “what works” in advancing social progress.

In simple words, SPI allows stakeholders to answer,

Do We Create or Destroy Economic and Shared Values through our actions and strategies?

“Facilitating CSR Investments” – An Application in a Nutshell.

Despite the Companies Act provision in 2013, which makes it mandatory for companies having
substantial net-worth, to spend at least 2% of their average net profits, several firms fail to
comply due to the unawareness of ‘which areas to invest in?’
The SPI can provide companies with prominent focus areas where investments can be made.

(Source: SPI India Publication)

Conclusion
“A state’s social progress is the result of cumulative incremental choices its governments,
communities, citizens and businesses make about how to invest
limited resources, how to integrate & work with each other.” – SPI India, 2017.

Every state exhibits areas of improvement and the Social Progress Index allows a
strategic approach to social development that identifies areas for prioritization and
investment. Although the index provides valuable insights, it cannot be considered as the
‘be-all end-all’. It is a discussion starter to assess performance and prioritize areas of

15 | P a g e
 improvement. At any given level of social progress, states can learn from their peers and
improve the standard of living of their citizens on whichever facets possible.

Usually, there are 4 approaches towards measuring “beyond GDP”:

1. The subjective approach which uses measures such as life satisfaction and happiness;
2. Composite indices such as HDI & OECD’s Better Life Index;
3. Dashboards that present unique, non-aggregated indicators; and
4. Monetary/accounting economic measures adjusted for social change.
However, none can distinctly measure social progress on its own.
The SPI in contrast has been able to accomplish this feat by independently measuring
social change, since it researches across the background fields of political science,
sociology, economics, history and other development sub-disciplines.

Appendix (List of the indicators used in SPI India, 2017)

16 | P a g e
(Source: SPI India Methodology Report (2017))

References:

17 | P a g e
  Social Progress Imperative (2017). Social Progress Showcased at the Center of Global
Goals Week. Retrieved from:http://www.socialprogressimperative.org/global-goals-
week-2017/
 ICI (2017). Discussion Paper: Social Progress Index: States of India Methodology Report
 Social Progress Index: States of India Results and Findings (2017)
 World Bank (2015). Retrieved from: https://data.worldbank.org/
 “Beyond GDP”- World Economic Forum Discussions
 Mismeasuring Our Lives: Why GDP Doesn't Add Up
Book by Amartya Sen, Jean-Paul Fitoussi, and Joseph Stiglitz
 Deloitte, Social Progress Index: Reports, Insights and Solutions
http://www2.deloitte.com/global/en/pages/about-deloitte/articles/social-progress-
index.html/
 Social Progress India Publication: Institute of Competitiveness of India

18 | P a g e