Photograph by Annabel Oosteweeghel
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Methodology for Developing Country Rankings
November & December 2004
The following explains how the rankings for the country chart were developed and calculated, and how they can be interpreted
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Choice of Criteria
The criteria were chosen to represent issues that concern and interest
Americans. So, for example, Italy might take its universal health care coverage
system for granted, and might not consider that it represents anything unique
about its own socioeconomic system. But looking at Italy through an American
prism, the health care system may stand out. There is no intention in this
analysis to represent any country as it particularly may wish to see
itself.
It is important to recognize that the criteria represent an impressionistic
picture of each country and not one that is intended to be detailed or precise.
For example, in early discussions in the development of this project we
considered such criteria as the availability of walking and bicycle paths and
the quality and availability of public transportation. Such measures were not
included in the final set of criteria due to problems with cross-country data
availability.
The criteria and countries ultimately used were culled in consultation with
AARP from a list of over 30 criteria and 22 countries originally submitted by
the author. All criteria are based on published data sources or research
studies. No criteria were based on independent primary
research.1
Developing the Rankings
The countries are ranked on a scale of 1 to 5, with 1 being the lowest score
and 5 the highest. A higher total score thus ranks a country as
"better" on the dimensions considered than a lower score. Zero scores
were not assigned; the lowest score a country could receive on any criterion
was 1.
Two types of criteria were included in the rankings: qualitative and
quantitative. An example of a qualitative criterion is the presence or absence
of prohibitions on mandatory retirement. Mandatory retirement was considered in
this report to be permitted as long as some groups of employees—even if
not all—could be required to leave employment on reaching a certain age,
and even if protection was available before that age. Mandatory retirement was
therefore measured in yes-no terms; countries that permit it received a 1 and
those that do not received a 5.
An example of a quantitative criterion is a country's unemployment rate.
The unemployment rate is measured in percentage terms, and countries can be
ranked with a precision of 1/10 of a percentage point.
The unemployment rate criterion can be used to show how a quantitative
variable was scored. The unemployment rates for 2003, the most recent full
calendar year, ranged from 3.8 percent to 11.3 percent, for a difference of 7.5
percentage points between the highest and the lowest. Each quintile, or 20
percent band, was therefore 1.5 percentage points. The values were assigned as
follows:
- 3.8 to 5.3 percent - 5;
- 5.4 to 6.8 percent - 4;
- 6.9 to 8.3 percent - 3;
- 8.4 to 9.8 percent - 2; and
- 9.9 to 11.3 percent - 1.
Interpretation
There is some potential for inconsistency in interpretation among
qualitative and quantitative criteria. For example, a country that permits
mandatory retirement received a 1 on that criterion (permitting mandatory
retirement was considered unfavorable in this report). A country with high
unemployment would also receive a 1 on that criterion, even though the
overwhelming majority of workers in that country are employed.
This example highlights the way the rankings should be used. The rankings
compare the score of each country on each measure to each other country on that
particular measure. They should not be used to compare a single country's
score on various measures, since each score is only meaningful in relation to
the scores of the other countries. For example, the data can be used to say
that the U.S. spends relatively less on social programs than does France, but
not that France itself spends relatively less on social programs than on
health.
Finally, it should be noted that several criteria overlap in meaning and
interpretation (income inequality among all households and income inequality
among elderly households provide one example).
1In three cases (elderly poverty for Japan,
net government social spending for Norway, and the proportion of elderly
receiving home help for Switzerland) a missing value was interpolated because
data consistent with other figures used in the study were not available.
Sophie Korczyk is an economist and consultant based in Alexandria,
Virginia.
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