2017 Family Prosperity Index

Jump to Section:

  1. Economics
  2. Demographics
  3. Family Self-Sufficiency
  4. Family Structure
  5. Family Culture
  6. Family Health

EXECUTIVE SUMMARY

The Family Prosperity Index (FPI) provides federal, state, and local policymakers—as well as religious and civic leaders and community-minded citizens—with the roadmap needed for the development of economic and social policies that improve the well-being and prosperity of American families and the communities in which they live. No other measure provides more credible and comprehensive insights into how the economy affects families, and how families affect the economy.

Unlike Gross Domestic Product (GDP), the unemployment rate, and other standard measures of relative economic performance, the FPI recognizes the vital, central role that families play as the engine that powers the American economy. Only by including the family as the central actor can any measure provide a complete, accurate, and useful picture of American economic prosperity and cultural well-being.

The FPI is hierarchical in nature and consists of six major indexes—Economics, Demographics, Family Self-Sufficiency, Family Structure, Family Culture, and Family Health (weighted equally at 16.67%)—with each having five sub-indexes (weighted equally at 20%). Each sub-index consists of one or more variables out of the 60 total (generally weighted equally) with each variable having two measures: the level (worth 80%) and 5-year average annual growth rate (worth 20%).

The Economics major index broadly explores the two factors that most directly impact the financial well-being of families—income and jobs. While this appears to be a simple task, defining income and jobs is actually quite complex. How and where income is earned determines the value of its ultimate use which is to purchase a lifestyle. At the same time, a job may not express a person’s highest and best use. The five Economics sub-indexes are:

• Private Sector Share of Personal Income

• Per Household Income

• Cost of Living

• Entrepreneurship

• Unemployment

The Demographics major index reveals that the American demographic pendulum has reached its crest with the Baby Boom generation and is now swinging the other way due to the significantly smaller generations behind it. Some are so small, in fact, that maintaining current population levels in several states, such as Maine and West Virginia, is already impossible without strong in-migration. This demographic bust is called “Demographic Winter.” The five Demographics sub-indexes are:

• Percent of Population Under Age 18

• Percent of Population Over Age 65

• Net Natural Population Change

• Net Domestic Migration

• Fertility Rate

The Family Structure major index is based on the fact that families drive the American economy. When families break down, there are very real economic costs to their communities. Marriage is the institutional structure from which families are born, and this index measures the extent to which marriage influences prosperity. The five Family Structure sub-indexes are:

• Children in Married Couple Households

• Marriage Rate

• Divorce Rate

• State of Households

• Families with Related Children in Poverty

The Family Self-Sufficiency major index measures the degree to which families are free to pursue happiness. This ranges from zero freedom if an individual is incarcerated to complete voluntary freedom through charitable work. On the same continuum, social pathologies are born/reinforced in the former and mitigated in the latter. The five Family Self-Sufficiency sub-indexes are:

• Prison Population

• Medicaid Spending

• Welfare

• Government Burden

• Charity

The Family Culture major index measures the extent to which the culture of the family is conducive to bringing children into productive adulthood. The roots of pathology that, for instance, put an individual on a path to committing crime form in childhood. At the same time, a strong sense of religion or higher level of educational attainment can lead one to a successful and productive adulthood. The five Family Culture sub-indexes are:

• Births to Unwed Mothers

• Violent Crime Rate

• Property Crime Rate

• Religious Attendance

• Educational Attainment

The Family Health major index measures the physical and mental well-being of the family through each individual member. An unhealthy member of the family creates an economic drag on the unit as a whole through lower incomes (associated with reduced productivity), increased medical expenses, and in the case of the death of a provider, lost income. The five Family Health sub-indexes are:

• Years of Productive Life Lost

• Risk Behavior

• Sexually Transmitted Diseases

• Infant Survival

• Self-Mortality

The FPI comprehensively measures the economic and social factors that are indicative of family prosperity, offering a way to fill in the gaps around GDP. A state that scores high on the FPI is one that is moving toward the goal of facilitating family prosperity, whereas a state that scores low is moving in the opposite direction.

Based on the 2017 Family Prosperity Index:

INTRODUCTION

“But even if we act to erase material poverty, there is another greater task, it is to confront the poverty of satisfaction - purpose and dignity - that afflicts us all. Too much and for too long, we seemed to have surrendered personal excellence and community values in the mere accumulation of material things. Our Gross National Product, now, is over $800 billion dollars a year, but that Gross National Product - if we judge the United States of America by that - that Gross National Product counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for the people who break them. It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl. It counts napalm and counts nuclear warheads and armored cars for the police to fight the riots in our cities. It counts Whitman’s rifle and Speck’s knife, and the television programs which glorify violence in order to sell toys to our children. Yet the gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile. And it can tell us everything about America except why we are proud that we are Americans.”

-Robert F. Kennedy, University of Kansas, March 18, 1968.[1]

The Family Prosperity Index (FPI) broadens the definition of “prosperity.” Common metrics, such as Gross Domestic Product (GDP), show prosperity merely as an amorphous aggregate measured strictly in economic terms.[2] Such measures fail to provide a complete picture of family prosperity because they ignore the social factors that determine the quality of our lives.

Data transformations such as “per capita GDP” still leave much to be desired even as they help control for demographic differences among areas. For example, children are not factored into these measures the same way adults are, yet their economic activity is co-mingled with their adult parents or caregivers.

The family is the core socio-economic unit from which to judge prosperity and should be the focus of political and civic leaders. Families seeking a reliable gauge of prosperity when determining where to live and work look beyond economic measures like GDP. They take a more holistic approach that considers such factors as safety, opportunity, education, and health, to name a few. In turn, the states that perform the best in relation to these factors are the ones that are truly prospering.

In fact, to that point, according to a landmark study published in the Quarterly Journal of Economics:

“Intergenerational mobility varies substantially across areas. For example, the probability that a child reaches the top quintile of the national income distribution starting from a family in the bottom quintile is 4.4% in Charlotte but 12.9% in San Jose. The spatial variation in intergenerational mobility is strongly correlated with five factors: (1) residential segregation, (2) income inequality, (3) school quality, (4) social capital, and (5) family structure.”[3]

Another study also found that:

“. . . [S]hifts in marriage and family structure are important factors in states’ economic performance, including their economic growth, economic mobility, child poverty, and median family income.”[4]

To this end, the FPI comprehensively measures the economic and social factors that are indicative of family prosperity, offering a true alternative to measures such as GDP.

As shown in Chart 1 and Table 1, based on the 2017 Family Prosperity Index:

METHODOLOGY

Construction

As noted above, the index itself is hierarchical in nature, built from six major indexes—Economics, Demographics, Family Self-Sufficiency, Family Structure, Family Culture, and Family Health (weighted equally at 16.67%)—with each consisting of five sub-indexes (weighted equally at 20%). Each sub-index consists of one or more variables out of the 60 total (generally weighted equally) with each variable having two measures: the level (worth 80%) and 5-year average annual growth rate (worth 20%).

In addition to the comprehensive scope of variables, the data sources are also varied, which insures the results are not just an artifact of the source. Sources range from pure survey data (e.g., American Community Survey published by Census Bureau) to pure administrative data (e.g., income data published by Internal Revenue Service) to hybrid survey/administrative data (e.g., data from Bureau of Economic Analysis).

Relative Index

The FPI is a relative index among the 50 states and does not compare the states to an ideal status. For instance, Utah is ranked the best among the 50 states, but many of Utah’s measures are declining, albeit more slowly than in the other states (see Trend Index section). For example, Utah has the highest percent of population under 18 and the top score in this sub-index, but it is lower in 2015 (30.5%) than it was in 2000 (32.2%). The FPI does not define the optimal level.

Normalization

The scores for each sub-index are normalized to ensure that they are comparable. In some instances, there may be an outlier state that compresses the score of other states significantly above/or below an average score of 5.00. This, in effect, increases/decreases the weighting of that particular sub-index relative to other sub-indexes. As such, normalization is performed by multiplying every state score by a constant (+/-) until the 50-state average is equal to 5. This can also lead to multiple states having a score of 10 since that is the highest score allowed.

Dynamic Relationships

Currently, the FPI is static, which means that a change in any one variable only affects the score of that variable. Over time, the FPI will employ dynamic relationships between variables where a change in one variable will impact the score of two or more variables. These will be released on a rolling basis through a series of FPI issue papers documenting these relationships. Additionally, the FPI online database will be updated with these dynamic relationships.

Notable Changes Between 2016 and 2017 Family Prosperity Index

There have been a few modifications to the Family Prosperity Index between the 2016 and 2017 editions, which expand its usefulness as a comprehensive measure.

First, the most significant addition to the FPI may be found in the Family Health major index. A new sub-index was added, years of productive life lost (YPLL), which measures mortality after birth but before the age of 75 (the standard cut-off age). Put simply, a person who dies at 25 would have 50 years of productive life lost (75 – 25 = 50). This calculation is made for every death in each state per 100,000 in population.

Second, in order to accommodate the addition of YPLL, illicit drug use was incorporated into the alcohol-tobacco-obesity sub-index and renamed the risk behavior sub-index. Additionally, illicit drug use has been disaggregated into marijuana use and illicit drug use other than marijuana in order to account for the differential physical impacts of marijuana vs. harder drugs such as heroin, cocaine, crystal meth, etc. Also, marijuana is becoming less illicit as more states (e.g., California, Nevada, Massachusetts, and Maine in 2016) legalize its use. The five variables in the risk behavior sub-index are weighted equally.

The final modification to the 2017 FPI is the addition of net income migration data from the Internal Revenue Service to the migration sub-index. As our state studies in Wisconsin and Rhode Island showed, the income associated with people who are migrating has a significant short-term impact (+/-) on the overall health of a state’s economy. The migration of people variable is weighted 80 percent and the migration of income variable is weighted 20 percent of the migration sub-index.

As a result of these methodological changes, as well as normal revisions to the data, the scores in the 2017 FPI supersede those of earlier editions.

Trend Index

The FPI is a relative index which means that it shows how well a state is doing against the other states or national average. What it doesn’t tell you is whether or not the long-term trend of these variables is positive or negative.

The Family Prosperity Trend Index (FPTI) was created to answer that question. The FPTI calculates the average annual percentage change (AAPC) over the entire available time period, 2003 to 2014, for every variable and applying the same FPI weights. This provides a snapshot of the overall trend of the FPI over time.

As shown in Chart 2, the FPTI for the U.S. average is decidedly negative with an AAPC of -2.61 percent over the 2003 to 2014 time period.[5] Family Culture was the only major index that was positive thanks to the decline in violent and property crime. This means that states are being ranked around a worsening trend.

To better highlight this, Chart 2 also shows the FPTI for the top-ranked (Utah) and bottom-ranked (West Virginia) states in the 2017 FPI. While Utah manages positive AAPC in the Economics and Family Culture major indexes, Utah’s overall FPTI was still -1.4 percent. West Virginia barely manages a positive AAPC in the Family Structure major index, but fares extremely poorly overall with a -5.78 AAPC.

Jump to Section:

  1. Economics
  2. Demographics
  3. Family Self-Sufficiency
  4. Family Structure
  5. Family Culture
  6. Family Health

[1] http://www.jfklibrary.org/Research/Research-Aids/Ready-Reference/RFK-Speeches/Remarks-of-Robert-F-Kennedy-at-the-University-of-Kansas-March-18-1968.aspx

[2] Although, keep in mind, that “dollars and cents” measures do in fact make value judgments. In essence, anytime a dollar exchanges hands, whether for an abortion, divorce, gambling, etc., GDP considers it implicitly “good” through inclusion. Yet, for other nonmarket activities, such as the production of stay-at-home moms, GDP considers them “bad” through exclusion. For more information, see: Warcholik, Wendy P., “Some Economic Applications of Evangelii Gaudium,” Crisis Magazine, December 3, 2013. http://www.crisismagazine.com/2013/some-economic-applications-of-evangelii-gaudium

[3] Chetty, Raj, Hendren, Nathaniel, Kline, Patrick, and Saez, Emmanuel, “Where is the Land of Opportunity? The Geography of Intergenerational Mobility in the United States,” Quarterly Journal of Economics 129(4): 1553-1623, 2014 http://www.equality-of-opportunity.org/assets/documents/mobility_geo.pdf

[4] Lerman, Robert I., Price, Joseph, and Wilcox, W. Bradford, “Strong Families, Prosperous States: Do Healthy Families Affect the Wealth of States?” American Enterprise Institute and Institute for Family Studies, 2015. https://www.aei.org/wp-content/uploads/2015/10/IFS-HomeEconReport-2015-FinalWeb.pdf

[5] Migration and cost-of-living variables were excluded for the U.S. average since they net to zero at the national level.