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The Tyranny of International Index Rankings

International Index rankings are random and open to manipulation, an academic study suggest.

I'ts an illusion that Norway is the world's best country to live in, a headline informed me this week, citing an academic paper by professor Karl Moene et al - but the article didn't link either to its award-winning source or the actual paper, which is here, and makes for very interesting reading.

I always thought there was something not quite right about those top ten lists of the best countries and cities to live in, especially since Norway and Oslo often bagged the top spot - and, frankly, I have lived in many better places. If I were to compare Oslo with Amsterdam, Brighton, London, Palo Alto, they would have very different pros and cons, and Oslo wouldn't be an obvious winner.

In fact, I'm inclined to think I had a better quality of life living in England than I have in Norway - especially if we disregard plumbing, housing and public transport;-) However, if I was still living in England, perhaps my conclusion would have been the opposite, and if I'd stayed in Palo Alto longer, perhaps that would have been my all-time favourite place to live. My inklings seem to be supported by the aforementioned study:

"International index rankings emphasize country differences where similarity is the dominant feature. The rankings of the Human Development Index, Freedom House, and Doing Business can be misleading, not because of wrong indicators, but because the estimation of the scores ignores inherent uncertainty. Re-estimated with a method that captures this uncertainty, it becomes clear that the practice of comparing adjacent countries is a rather courageous activity," the abstract reads.

It asserts that such rankings are close to useless when it comes to differentiating between Norway and other rich democracies, and are only useful for telling us who scores really high and low.

"One can hardly open a newspaper without finding a reference to an international index. International country rankings provide an instant idea of the relative success of a country vis-`a-vis other countries in the world.

"Their appeal lies in their simplicity. Their users need no more statistical knowledge than readers of the sports pages in the newspapers. Just as boxers and football teams are ranked according to their performance, countries are ranked according to their ability to provide a high standard of living, democratic rights, and an appealing business environment.

"Just as pundits use sport rankings to place their bets for the weekend, journalists use country rankings in their search for an easy way to finish their Saturday commentary and policy makers use the country indexes to guide their decisions over own policy and evaluate other countries. It seems like we are blessed with a tool that everybody can understand and that is appropriate for a wide range of purposes," reads the introduction.

I'm reminded of Jeremy Clarkson's less scientfic, but spot-on and immensly amusing take on international index rankings in "Let's be happy like the Danes"(2007), worth reading in full:

"Apparently the main reason why Danes claim to be so happy is that they always expect life to be worse than it really is. They expect to be cold. They expect to pay 95% tax. They expect to be decapitated by a gang of youths who’ve found the little mermaid has already had its head kicked off and are now looking for another target. They are therefore delighted when they get home to find their family still have all their limbs, that the heating is working and that their tax bill’s been reduced to 94%."

And as if to prove that human beings, especially a nation's guardians and those who are supposed to guard them, are vain creatures who sometimes find it easier to stir up a storm in a teacup than grapple with structural, long-term challenges that are not so easily or quickly resolved, professor Moene et al's study also warns:

"Media, policy makers and researchers often end up discussing the deep causes of a slight alteration in the internal [index] rankings. What is even more problematic, especially for the Doing Business Index, is that policy makers may design policies more to improve their rankings than to improve their real performance. Governments may be tempted to engage in what we denote “rank-seeking” behavior to improve the relative standing on the indexes more than the situation on the underlying phenomena." In other words, plenty of food for thought here, well worth a read.


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