The Global Social Progress Frontier

Abstract

The need to measure social well-being of a society has gained the same importance as the estimation of national wealth, since many have started to notice that national wealth is not efficiently used in the benefit of the society. Until 2014, there were no indices that have captured the most vital aspects of the social welfare without interacting with any existing economic attributes. Our analysis uses the most recent data of Social Progress Index to investigate these inefficiencies through the stochastic frontier model. Due to the short time variation, we have applied a twostage estimation procedure of the JMLS technique. We find that these inefficiencies are impacted by exogenous factors, such as culture, history and geography. Each society can be distinguished by religious beliefs, geographical location, historical traces, and for that reason, these factors impact the societal well-being. We conclude that, Sub-Saharan African countries demonstrate the highest inefficiency levels due to their colonial history, geographical features and religious beliefs. Besides, we also estimate that this continent has the highest ethno-linguistic division, causing considerable negative deviations from the frontier line. Still, most of the countries are so driven around economic prosperity, that inefficiency levels vary noticeably compared to the inefficiency variations in real GDP per capita levels. It is apparent that at similar GDP levels, these countries may experience very different social progress levels.