New Index shows U.S. prosperity is rising but would benefit further from policies to improve mental health and strengthen social networks

Legatum Institute develops new United States Prosperity Index

  • Overall U.S. prosperity has increased over the last decade with only Alaska, Louisiana, North Dakota and South Dakota seeing a decline.
  • The gap between the most (Massachusetts) and least (Mississippi) prosperous states has narrowed.
  • The Northeast is the most prosperous region and the Southwest the least.
  • No state is performing well on all aspects of prosperity so all have opportunities to improve.
  • Health has improved across the U.S. but the country is facing a mental health crisis.
  • Social capital is declining, with less trust in media and decreasing interaction with neighbors.

A new United States Prosperity Index (USPI), published by the Legatum Institute, reveals that prosperity has increased across America over the last decade. However, the growing mental health crisis and declining social capital is holding back further growth. The data shows that no state is performing well on all aspects of prosperity, so all states could learn from each other to improve.

The USPI is the first comprehensive assessment of all aspects of prosperity across America, allowing comparison between the different regions and states. It measures the extent to which all 50 states plus Washington, D.C. have open economies, inclusive societies and empowered people.

The research shows that prosperity has increased across the U.S. over the last 10 years. Washington D.C. saw the greatest improvement, followed by California and South Carolina. Progress in health, education and living conditions have all contributed to the improvement in prosperity. In addition, the majority of states have enhanced the quality of their economy, as they have recovered from the financial crisis. Only four states – Alaska, Louisiana, North Dakota and South Dakota – saw a deterioration in prosperity over the last 10 years.

The USPI shows that the gap between the most and least prosperous states (Massachusetts and Mississippi respectively) has narrowed over the last decade. However, those living in the Northeast region are still significantly more prosperous than those in the Southwest or Southeast. Five of the top 10 states are located in the Northeast, while nine of the bottom 10 are in the South.

This North-South divide is particularly concerning in the domain of inclusive societies, which captures the institutional aspect of prosperity and includes elements such as levels of crime, the rule of law, political accountability, discrimination, and social tolerance. The data suggests that a lack of strong institutions means that, in many parts of the country, economic policies have increased wealth-generation, but this has not translated into better health, education and living conditions. While unemployment has generally recovered following the financial crisis, the number of households below the poverty line has not yet decreased to the same extent.

Further growth in prosperity across the U.S. as a whole is being held back by a number of factors – in particular a growing mental health crisis and declining social capital, evidenced by lower trust in the media and less interaction with neighbors. Across the U.S., drug overdose-related deaths almost doubled between 2009 and 2017, resulting in over 70,000 deaths, more than two-thirds of which were opioid-related. Public confidence in media has fallen from 62% in 2009 to 55% in 2019, and only 17% of Americans currently trust the federal government. Neighborly relations have also declined over the last decade, with the proportion of Americans who report frequently talking to neighbors falling from 71% to 57% in the last decade, and the proportion doing favors for neighbors dropping from 39% to 31% in the same period.

The USPI rankings show that some states outperform others. But it is clear that none has yet succeeded on all aspects of prosperity. Every state except Massachusetts ranks lower than 20th for at least one of the 11 pillars of prosperity.

Dr Stephen Brien, Director of Policy at the Legatum Institute, commented: “There is much to be positive about when considering the prosperity of the United States. It has a strong economy with well-developed infrastructure, competitive markets and plentiful access to finance. Yet it is clear that not everybody is seeing the benefits of this economic strength.

“Our research demonstrates the truth of Justice Brandeis’ description of the states as laboratories of experimentation. Each state has different strengths and weaknesses, performing well on some aspects of prosperity but struggling in others.

“One of the U.S.’s historic strengths is that its institutions were designed so the success of the individual would feed into the success of society and vice-versa. But it is clear that this relationship has broken down in many areas.

“We urge U.S. policymakers and influencers at both state and federal level to examine the data and insights included in our report. We hope they can use it to identify opportunities to further develop open economies, inclusive societies, and empowered people, and deliver higher levels of prosperity for all.”

Philippa Stroud, CEO of the Legatum Institute, said: “This Index provides an incredibly rich, holistic dataset. It allows the potential of each state to be identified and understood, which enables much more targeted policy responses.

“Many states have demonstrated that improvements are possible. In just one year, Washington D.C. reduced the incidence of homelessness for families with children by almost a fifth, and Colorado increased access to rural broadband from around half to nearly three quarters. These examples illustrate that creating pathways from poverty to prosperity is possible in every state.

“But there are also some country-wide issues that affect nearly all states. The growing mental health crisis is of particular concern. In addition, it is worrying that, although social tolerance has improved in many regions, there has also been an increase in the concentration of hate groups.

“Policymakers rarely consider fiscal and macroeconomic policy at the same time as social factors. But prosperity is the result of economic and social wellbeing working together. This report demonstrates the vital importance of viewing prosperity holistically to create an environment in which everyone can reach their full potential.”