CONTEXTUALLY CONTROLLED OUTCOMES GIVE ONE A DIFFERENT PICTURE OF GOVERNANCE
My last post explored the idea of a two-dimensional approach to measuring governance in the child health area. A couple of comments agreed that this is appealing from a policy perspective. It shows visually where welfare is being produced and lost between the quantity and cost elements of the outcome. This is something that you won't currently find in any approach to governance (If I am wrong, please tell me...I'm always looking for new measures).
I also believe that a one-dimensional governance indicator might be calculated through the proposed approach, however, and be something for consideration. It would be a single measure that one could point to in referring to the overall governance outcomes of a field or sector. Again, it does not reflect on governance processes--just the degree to which governments exercise their authority in a way that ensures children stay alive to 5 years and that does not crowd out other outcomes because of excess expenses.
This would essentially involve combining the two elements introduced in my last blog posting to see how far an individual country departs from its income group on both survival rate and cost measures. The combined deviation-from-mean scores are shown in the figure below. The z-score for cost in each country has been subtracted from the z-score for survival rate; for the USA this results in 0.13-2.64=-2.51. The USA fits into the area to the left of the vertical line, which reflects increasingly weaker outcomes, welfare for citizens and hence governance.
The vertical axis in the above figure is the same as that used in the figure below (which illustrates World Governance Indicator scores). This shows that the new indicator is not biased by a country’s income group (as most governance indicators are). Actually, the focus on income-group controlled survival rates and costs leads one to identify three lower income countries as having the (relatively) best governance in the 181 country sample (Comoros, Pakistan and Bangladesh). The worst ten performers come from an assortment of income groups, including higher income (Equatorial Guinea and the USA), upper middle (South Africa and Gabon), lower middle (Kiribati, Timor Leste, and Djibouti) and lower income (Sierra Leone, Rwanda and Burkina Faso).
WGI government effectiveness scores for 181 countries, 2007
Readers might ask the obvious questions: is governance in the child health sector really better in Pakistan and the Comoros than it is in the United States?
The answer is yes, given the different contexts of these countries.
While Pakistan and the Comoros have lower under five survival rates than the USA, these survival rates are high relative to the income group of which they are a part, and the cost of generating these survival rates is relatively low, given their comparators. The USA has average survival rates, relative to its high income reference group, produced at very high costs relative to its peers. These high costs cause the United States to score substantially below the high income league averages on the combined u5mr/cost measure—as shown in the top figure.
Put differently, Pakistan and the Comoros may be lightweights but they box excellently at that weight level. The USA is a heavyweight that is struggling in its weight division...
Observers might argue that the method adopted as a basis for this indicator is biased against wealthier countries, given that these countries are all abutting the upper limit of child survival (100%) while costs have no such limit and the health care costs in wealthier countries are likely to be higher than in others. The backward tilt in the top figure may reflect this problem, with fewer wealthier countries able to score a combined high positive standard deviation and a large group of (mostly OECD) wealthier countries scoring in the negative standard deviation area.
There is variation in the high-income group of countries, however, and some countries (like Singapore) score better than their comparators in both the survival rate and cost data. Better performing countries in this high income group all have low health care costs per capita, as well, and on the basis of our work we argue that costs may actually have a practical, unofficial upper boundary. Eighty-six percent of the high income countries have costs below 10% of GDP, which we would suggest seems to emerge as a reference point to think about as some kind of comparative limit. (This is calculated on the basis of per capita health spending in 45 OECD and non-OECD countries. All of the wealthier non-OECD countries have per capita figures below 10% of GDP and 83 percent of the OECD countries are below this figure too. A total of 93 percent of the 178 countries in our data set have per capita health spending below 10% of GDP.)
The United States is the only high income country to score more than two standard deviations below its peers on the overall indicator. We suggest that it could learn from a host of other high income countries how to govern its child health arena better (especially countries like Japan and Korea, both of whom are more than one standard deviation above the peer mean). These countries appear to have better governed child health fields, where comparatively strong under-five survival rates are achieved at relatively low costs. This is not to say that the governance structures here have cultural, political or other transferability, but just that they appear to offer an example of good practice within the United State’s income league and our indicator points to lessons the USA could learn from them.
In future posts I will relate the performance of higher income countries with other higher income countries, and so forth, and discuss how this comparison might be used to test for governance impacts on relative outcomes.