Vision to Reality: The Reut Blog

Newsweek ranked Israel 22^nd in its annual index of the “World’s Best Countries,” which was published yesterday. While it remains true that Israel has achieved relative success in raising GDP per Capita and providing health service, it still lags behind most other countries in the magnitude of its income gaps and the quality of its education system.

The Newsweek index answers a question that is both simple and complex at the same time: if you were born today, which country would provide you with the best opportunity to live a healthy, safe, prosperous, and mobile life?

When answering this question, Newsweek ranked Israel 22^nd out of 100 countries. It ranked Finland, Switzerland, and Sweden as the best countries, and Cameroon, Nigeria, and Burkina Faso as the worst. But what were these rankings based on? Newsweek focused on five core areas: Health, Education, Quality of Life, Economic Dynamism and Political Environment.

A look at Israel’s performance in these areas reveals the gap. On the one hand, Israel was ranked 7^th in the world in the quality of its health services, a significant achievement. Yet on the other hand, Israel was ranked 44^th in the world in the quality of its education (which was measured by Israel’s scores on TIMSS and/or PISA tests). This placed Israel behind Malaysia, Peru, and Kazakhstan in the quality of its education.

But perhaps the most important area measured by Newsweek was the quality of life. The Reut Institute has long argued that in order for Israel, or any country, to leapfrog socio-economically it must experience a significant and continuous improvement in the quality of life. Therefore, the overarching vision guiding the socio-economic work of The Reut Institute has been, and continues to be, the ISREAL 15 Vision—that Israel will become one of the fifteen leading countries in terms of quality of life within fifteen years. The challenge is measuring such a broad concept as quality of life.

In its ranking, Newsweek chose to measure quality of life based on a few variables: income inequality (GINI), gender gap, percent of people living on less than 2$ dollars, homicides per 100,000 citizens, environmental health, and unemployment rate. According to these variables, Israel was ranked 25^th in the world in its quality of life. Whereas Israel has a relatively low unemployment rate (7.4%), its ranking suffered due to a high level of income inequality (GINI Rate of 39.2%) and a high level of homicides per 100,000 citizens (4.7).

Other indices have also tackled the challenge of quality of life including the Economist’s Quality of Life Index, The UN Human Development Index, and The OECD Fact Book.  The differences between these indices further demonstrate the complexity in measuring or evaluating quality of life. While certain variables, such as per capita income and personal security, provide easy measures, other, less tangible variables, such as social cohesion and life satisfaction, are more difficult to measure.

Nonetheless, Economists and policy makers should not give up. International indices are important in that they provide the means of quickly comparing Israel achievements to other countries. Such comparisons help decision makers evaluate their current policies and also provide them with indicators on where additional policy is needed.

That being said, International indices do have certain limitations. Quality of life in particular, presents issues because it is so affected by abstract factors and subjective perceptions. For example, for the quality of life of many Israelis is affected by the “Jewish added value”—the amount of satisfaction they draw from being part of the Zionist movement. But measuring Jewish added value can be difficult.

We at the Reut Institute believe that despite these difficulties, quality of life must be measured in order for Israel to leapfrog. Specifically, we believe quality of life should be measured based on four areas: economic security, social wellbeing, personal and physical security as well as the “Jewish added value.” While the Newsweek ranking addressed some of these areas, it did not address others. Moreover, in the areas it did address, the index it used may not have been the most relevant one. Either way, more work is needed.