Prosperity is about much more than wealth. It reaches beyond the financial into the political, the judicial, the wellbeing and character of a nation – it is about creating an environment where people are able to reach their full potential. A nation is prosperous when it has an open economy, an inclusive society with strong institutions, and empowered people who are healthy, educated and safe.

Our mission at the Legatum Institute is to create the pathways from poverty to prosperity, by focusing on understanding how prosperity is created and perpetuated. By identifying success, we can enable national and local governments, businesses, civil society and leaders to see what works and adopt best practices, and also enable others to hold them to account.

The United States’ overall economy is world-leading. It is open, with well-developed infrastructure, competitive markets and plentiful access to finance; its institutions are robust, with strong social capital, supported by strong education. However, it under performs in health, living conditions and safety, and as a result is ranked 17th (out of 149 countries) in the Legatum Prosperity Index^TM, nestled between Belgium and Slovenia. Furthermore, it has not advanced in the rankings over the last 10 years.

We wanted to understand why the undeniable economic success of the U.S. has not yet translated fully into social wellbeing. So, with the generous support of The Leona M. and Harry B. Helmsley Charitable Trust, we have created a new United States Prosperity Index, defining and measuring the prosperity of each of the 50 states of the Union as well as Washington, D.C. over the past decade.

For the very first time, this Index enables us to construct a thoroughly comprehensive picture of prosperity, across its economic, institutional and social dimensions, for all the different states and regions of the U.S.

The following key findings emerge:

Prosperity in the U.S. has been steadily rising for the past decade, and the gap is narrowing between the most prosperous state (Massachusetts) and the least prosperous state (Mississippi).

There is an uneven spread of prosperity across the U.S., with a strong divide between the high prosperity seen in the Northeast and the weaker performance of states in the Southwest. Over the past 10 years, the West has seen the greatest improvement in prosperity.

While some states clearly outperform others on prosperity, no single state has yet succeeded in fully securing both economic and social wellbeing for its population; opportunities exist for all states to learn from each other.

Improvement in U.S. prosperity has been driven by growth in economic quality. Employment has recovered in almost all states following the financial crisis, although the number of households below the poverty line has not decreased to the same extent.

Growth in prosperity has also been supported by improvements in health, education and living conditions. Increased medical visits arising from greater healthcare access, improvements in primary and secondary educational outcomes, and improved internet connectedness, particularly across rural areas, have all helped increase prosperity over the past 10 years.

However, despite improvements across many aspects of health, further growth in prosperity is being held back by the declining mental health of Americans, evidenced by large increases in drug overdoses deaths, rates of suicide and serious mental illness across all regions.

Declining trust in the media and other institutions, and less interaction with neighbors, are the main contributing factors to the deterioration in social capital, which is also hampering greater growth in prosperity.

Conclusion:

Prosperity in the U.S. is at its highest ever recorded level, and has improved in all but a handful of states in the past 10 years. There is much to be positive about; yet it is clear that not everybody is seeing the benefits.

All states have the potential to increase their prosperity. There are also some country-wide issues that affect nearly all states and require attention. The rise in mental health problems is alarming. Similarly, there are concerns with certain social networks showing signs of deterioration.

The overall picture of strongest and weakest state performers, as presented in this report, masks a myriad of further insights and opportunities at the regional and state level. These can be further explored through the state profiles available via the United States Prosperity Index website, which also makes available the underlying data for further analysis.

We hope this new Index will, by identifying the particular challenges and opportunities being faced by each state, enable a more targeted policy response and equip individuals, communities, businesses and institutions to work together to build greater prosperity for all their people.

To learn more about the U.S. Prosperity Index, click here.

Insights from the State-by-State Index:

The United States Prosperity Index was launched at the American Enterprise Institute (AEI) in Washington D.C. in July 2019. During the launch event, there were presentations of the key findings and emerging trends from the authors, followed by a panel discussion of experts from various organisations. To find out more, you can watch the video below.