Participants carry a giant US flag during a Memorial Day parade in Washington on May 27, 2013.
Participants carry a giant US flag during a Memorial Day parade in Washington on May 27, 2013. - 
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According to some economists who have criticized standard economic metrics, we have more than enough ways to measure how the economy is doing -- gross domestic product, the unemployment rate, the Dow, to name just a few -- and not enough ways to measure how people are actually doing in the economy.

An alternative metric to GDP, that gauges ‘human development,’ was advocated by the late economist Mahbub ul Haq, and developed by ul Haq and Indian Nobel economics laureate Amartya Sen. An adaptation of their Human Development Index (HDI) for the U.S. economy has been deployed by the Social Science Research Council to measure the well-being and opportunity of Americans. The group’s third installment is out today, entitled “The Measure of America 2013-2014.”

Are we getting healthier, smarter, richer?

The report attempts to answer these questions. It concludes that over many decades, across most racial and ethnic groups, the U.S. is making steady progress on health and education (life-expectancy is the primary measure of health; education is measured by a combination of average years of schooling or degrees completed, and school enrollment). Crime -- another aspect of quality of life that is not included directly in the HDI -- is also down significantly.

The chart above shows the human development index for all 50 states. States with darker shading scored higher. (Source: Social Science Research Council)

“Measure of America” co-author Kristen Lewis says over the past 50 years, gains in life expectancy have come “largely from public health measures -- not from insurance or specific medical treatments, but from things like campaigns against smoking and mandatory seat-belt use.”

But on income, the U.S. has not been progressing, says Lewis. Between 2000 and 2010, a typical worker’s wages decreased by $2,200. And that decline is only partly accounted for by the Great Recession. Lewis says the underlying trend has been visible for decades.

The chart above shows the change in median personal earnings from 2000 to 2005. Green states saw earnings increase. Red states saw earnings decrease. Striped states saw stagnant earnings. (Source: Social Science Research Council)

Since 1974, Lewis points out, U.S. gross domestic product has tripled. “If you were using GDP as a gauge of human progress, you would assume that all that activity had translated into a vast improvement in people’s access to financial resources and improvements in their material well-being,” says Lewis.

But in fact, she says, the vast majority of income gains have gone to the top one percent of earners. “Ordinary Americans are now in their fourth decade of treading water when it comes to wages,” says Lewis.

Some states do better than others

Vermont isn’t a wealthy state. But it does a good job of broadly raising its residents’ life expectancy, education, and income. Louisiana -- despite a booming petrochemical industry and high per-capita GDP -- does poorly by comparison at spreading the well-being around. Vermont ranks 15th overall on its Human Development Index; Louisiana ranks 46th.

Michigan is the only state in the study to have fallen in HDI from 2000 to 2010.

The only states with rising incomes (aside from Washington, D.C., which has thrived on government jobs and contracting) are in the oil-drilling and natural-gas-fracking patch -- Montana, North and South Dakota, New Mexico, Wyoming, West Virginia.

But booming resource-based economies don’t necessarily improve people’s overall well-being, says Lewis. That’s because natural-resource extraction industries (drilling, mining), processing (refining and chemical production), and transportation (pipelines, trucking) bring a host of problems with them -- everything from dangerous, risky work with high injury rates, to transient jobs, overcrowding, and inflation of local housing costs. Such development also disproportionately impacts poor and minority communities, bringing pollution, traffic and other problems.


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Follow Mitchell Hartman at @entrepreneurguy