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A Prosperity Index
for British Columbia:
Technical Background

Andrew Sharpe

Final Report

Research Prepared for the Business Council of British Columbia
September 2019

A Prosperity Index for British Columbia: TechnicalBackground1
The Business Council of British Columbia (BCBC) is committed to developing a “B.C.
Prosperity Index” for release in 2019. The twin objectives of the index are to track the province’s
performance on various socio- economic indicators, both individually and in the aggregate,
related to prosperity, defined in terms of living standards and economic well-being, over time
and to compare the level and growth rates of these indicators with other sub-national andnational jurisdictions.
The purpose of this report is to present the estimates of the Prosperity Index for British
Columbia with comparisons with three types of other jurisdictions (i.e. peer countries, Canadianprovinces and Pacific U.S. states). The report has eight parts. The introduction reviews therationale for such an Index and highlights the domains and indicators. The second section
outlines the methodology for the Index. The third section discusses the selection of specificindicators for the Index. The fourth section discusses data sources and issues. The fifth section,
the longest, presents the preliminary results, with both level and growth rate comparisons ofBritish Columbia with other provinces, OECD countries and the three U.S. Pacific States, as wellas an aggregate comparison putting the three types of jurisdictions together. The sixth section
compares the B.C. Prosperity Index with other composite indexes that include B.C., such as theIndex of Economic Well-being and the Human Development Index (HDI). The seventh section
outlines an agenda for additional work on the Index. The eighth and final section concludes.

Introduction to the B.C. Prosperity Index: Background, Rational, Domains,and Indicators
Prosperity is a key societal objective. There is no widely accepted definition of what
exactly constitutes prosperity, but the notion is closely linked to the state of living standards andthe economic well-being of the population. GDP per capita is part of this picture but isincomplete as it omits such considerations as income distribution, economic security, andenvironmental conditions. Many indicators can be used to assess what represents a prosperous
economy and society and what determines prosperity. Both individuals and groups in society will
have different views on what indicators are important. This report represents the perspective of
the Business Council of British Columbia on what matters for a prosperous B.C.
In addition to identifying a number of indicators important for prosperity, this report goesa step further and produces a composite index that aggregates various indicators into a single
number. Composite indexes are not without controversy. They are subjective in that the results
1This report was written by Dr. Andrew Sharpe, Executive Director of the Centre for the Study of Living Standards(CSLS). He thanks Jock Finlayson, Ken Peacock and Dr. David Williams at the BCBC for detailed comments. CSLS
economists Sebastian Tansil and Simon Lapointe were responsible for the development of the database.

1depend on the choice of indicators included in the index and the weights given the indicators toroll up to the composite index. But the Business Council of British Columbia believes that thesefeatures or characteristics of a composite index are more than offset by two major strengths oradvantages.
The first is the ability of a composite index to produce a bottom line in relation toprosperity, both in terms of trends over time within a jurisdiction, and in terms of levelcomparisons of the prosperity of one jurisdiction with that of other jurisdictions. The second is
the ability of a composite index, largely because of the bottom line it produces, to garnerattention from media, policy makers, private sector stakeholders, and the general population.
This attention can in turn lead to pressure on societal actors to do something, resulting in changes
in public policy or private sector behavior and actions.
In many ways, the debate on the relative merits of a composite index versus a set ofindicators, generally called a dashboard, is not particularly helpful. Both are important. Without
accurate, relevant and meaningful indicators, a composite index cannot be constructed. Indeed,
the first action often taken when a composite index is released is to disaggregate it to see whatindicators are driving it. In turn, the bottom line produced by a composite index focuses attention
on the indicators that are driving the results and if the results are poor, this can lead to action to
improve the situation. There is room for both composite indexes and a set of indicators in theworld of assessments of socio-economic performance. It is not an “either-or” situation.
The primary target audience for the B.C. Prosperity Index is the public through media
coverage, although business leaders and policy makers at both the political and bureaucraticlevels are also desired audiences. This means that the Index should be as simple and transparent
as possible, especially regarding methodology. In addition, the indicators selected for inclusion
should be considered relevant and important by the public.
Domains and Indicators
The B.C. Prosperity Index consists of three domains and 12 indicators. The domains are
the business environment, economic well-being, and societal well-being. Each domain includes
four indicators, although the societal well-being domain has two sub-indicators for theenvironment variable. In total, there are 13 data series in the B.C. Prosperity Index, which arehighlighted below by domain.
Business Environment:•labour productivity, as expressed by total economy GDP per hour worked, aproxy for an economy’s ability to generate increases in real income;•investment, as defined as the share of non-residential investment in GDP;2•innovation, as proxied by the share of R&D expenditure in GDP;•

education, as represented by the share of the population 25 and over who havecompleted post-secondary education;

Economic Well-Being•

real GDP per capita, a measure of an economy’s ability to produce goods andservices for the population;•

household income, represented by the purchasing power of households for goods
and services after taxes and transfers, measured on a per person basis;•the unemployment rate for persons 15 and over, which represents the ease ordifficulty for a person to find employment;•

housing affordability, as expressed by the proportion of disposable income ahousehold spends on housing;Societal Well-being•

life expectancy, measured by the number of years a person expects to live,
measured at birth;•the poverty rate for all persons, based on the market basket poverty measure, ameasure of the share of the population not able to reach a socially acceptable
minimum level of income;•income inequality, as shown by the after-tax Gini coefficient, a measure of theconcentration of income in a jurisdiction;•

environment: air pollution, as measured by PM 2.5 concentration;•

environment: per capita greenhouse gas emissions.

3

Exhibit 1: The B.C. Prosperity Index:

Methodology for the B.C. Prosperity Index
Overview of the Index
Simplicity is a strength of composite indexes as it enhances transparency. The B.C.
Prosperity Index has been designed on this principle. As shown in Exhibit 1, the Index consistsof three domains, each with four variables or indicators for a total of 12 variables or indicators.
One of the indicators (for the environment) includes two sub-indicators or variables, so there arein fact 13 data series needed to construct the Index.
The three domains are the business environment, economic well-being, and societal wellbeing. The four indicators in the first domain relate to productivity, investment, innovation, andeducation. The four indicators in the second domain are GDP per capita, household income,unemployment and housing affordability. The four indicators in the third domain relate to life
expectancy, poverty, income inequality, and the environment (with two sub-indicators used forthe environment).
4

Time series for the absolute values of each indicator for the three types of jurisdictions(provinces, international and U.S. states) have been collected. Each observation is then divided
by the value for British Columbia in 2017 to convert the actual time series values for all years
into indexes. These indexes allow both calculation of growth rates for the indicator over time andcomparisons in absolute terms of the indicators across jurisdictions. For example, an index valueof 90 for a province in 2016 would mean that the level of that indicator was 10 per cent lower
than the value of that same indicator in British Columbia in 2017. To compare with British
Columbia in 2016, the index is divided by the B.C. value for 2016.
Composite Indexes versus Dashboards
There has been an important debate in the well-being literature on the relative value of acomposite index versus a dashboard of indicators. Those who oppose composite indexes feel thata dashboard or set of indicators is sufficient to monitor trends in well-being. Those supporting
composite indexes make that case that a composite index provides additional value compared toa set of indicators. The debate boils down to whether the construction of composite indexes is aworthwhile exercise. The Business Council of British Columbia has chosen the composite index
route.
There are a number of arguments in favour of composite indexes (OECD, 2008:13). First,
composite indexes provide an assessment of overall trends or the bottom line for well-being,
unlike a dashboard, Second, with a bottom line, a composite index can generate greater public
and media interest than a set of indicators. Third, composite indexes can summarize complex
multi-dimensional realities with a view of supporting good decision making. Fourth, composite
indexes are easier to interpret than a battery of many separate indicators. Fifth, a composite index
reduces the visible size of a set of indicators without dropping the underlying information. But
this underlying information is not lost and therefore it can be used to drill down to explain thetrends in the composite index.
There are also arguments against the use of composite indexes. Some say that composite
indexes may send misleading policy messages if poorly constructed or misinterpreted and may
invite simplistic conclusions. Composite indexes can also potentially be manipulated throughchoices related to methodology and weights if an index is constructed for promoting a particularpolicy or to provide evidence on some preconceived trend.
These criticisms can have validity. All tools can be misused. But such misuse does not in
the BCBC’s view undermine the case for composite indexes where there is transparency inconstruction and where the underlying values and intentions of the constructor are known.
It is unlikely there will ever be a consensus on whether the construction of composite
indexes is a worthwhile exercise. Those who feel they are useful will go ahead and constructthem, as they should in a world where researchers have freedom to choose the tools andmethodologies they judge to be most appropriate.
5Participants in the dashboard/composite index debate often fail to appreciate that what
adds most value to the understanding of trends in well-being is the building of thecomprehensive data base needed for the composite index, not the methodological choices forconstruction of the index or even the composite index itself. This task is often much more time
consuming than the actual construction of a composite index from an underlying data set. The
construction of a composite index is just a final step in the representation of the data in thedashboard.
Data Normalization
Composite index construction generally involves some type of normalization of the data.
One can in principle avoid normalization by calculating indexes (base year equals 100 or 1.0) for
the time series of all indicators from the raw data, and then weighting the indexes into acomposite index. A significant advantage of not normalizing the data is that transparency ismaintained. Because the BCBC puts a high value on simplicity and transparency, it has decided
to avoid the normalization approach and to use indexes based on the actual data,
BCBC recognizes that there are two drawbacks with such an approach. First, the varianceof time series indicators can vary greatly. Without normalization, one will be implicitly givingmuch greater weight to indicators whose time series exhibit large per cent changes or greater
variance (e.g. the unemployment rate), compared to indicators whose time series exhibit small
per cent changes or less variance (e.g. the Gini coefficient). This may or may not be perceived asa problem. If it is considered a problem, it can be remedied by standardization through z-scores
which coverts indicators to a common scale with a mean of 0 and a standard deviation of one.
Second, the use of non-normalized data leads to problems with indicators where an
increase is negative for well-being and a decrease is positive (the directionality issue), such as
the unemployment rate. One cannot simply index the unemployment to 1 in the initial year andthen combine the resulting time series with time series where an increase from the base year is
positive and a decrease negative. One way to deal with this issue is to use the reciprocal of theindex value of time for aggregation. This works but it is not a linear transformation of the dataand can bias the resulting composite index. Another approach is to use the Min-Max
normalization technique, which subtracts the minimum value and divides by the range ofindicators, giving values from 0 to 1. Again, for the sake of transparency, BCBC has chosen to
use the reciprocal of the index value when an increase in the index represents a negative
development from the perspective of prosperity.

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Weighting of Indicators2
Once indicators have been selected, they must be aggregated into a composite index
through a weighting scheme. The weighting issue is a difficult one. One approach is to use
statistical techniques such as principal component analysis, factor analysis or cluster analysis thatmake use of the relationship between indicators to identify which indicators are the mostimportant (have the largest variance). Another approach is to use opinion or values surveys
and/or focus groups to identify public perceptions on the relative importance of the indicators.
Expert opinion, either of the builders of the index or other experts, can also be used to weight theindicators. Finally, indicators can be equally weighted. This latter approach is the simplest andmost transparent. It is also an approach that is less subject to criticism of bias. Equal weights
give the appearance of being objective, balanced, reasonable and unbiased. Of course, they
assume that all indicators are of equal importance, which may not be true.
BCBC has chosen to use an equal weighting scheme for the B.C. Prosperity Index, bothfor calculation of the domain index based on the indicators in each domain and for the overall
index based on the index values for the three domains.
Comparator Jurisdictions
The choice of comparator jurisdictions for a composite index is also important as thisdetermines the ranking of the overall index. Again, one can consciously or unconsciously
manipulate the ranking of an index by selecting jurisdictions whose indicators tend to be higher
or lower than the reference jurisdiction.
In relation to the B.C. Prosperity Index, the key criterion for the selection of thecomparator jurisdictions is the perceived relevance or importance of the jurisdiction to the peopleof British Columbia for both level and growth rate comparisons related to B.C.’s prosperity.
Since British Columbia is a sub-national jurisdiction, obvious comparators would be the otherprovinces of Canada and individual U.S. states, notably those along the West coast. It was also
considered important to compare British Columbia with the Canadian average and with selectedOECD countries that share strong similarities in institutions, education levels, and their stage of
economic development.
The 21 jurisdictional units included in the B.C. Prosperity Index are the 10 Canadianprovinces, the three Pacific U.S. states (California, Oregon, and Washington) and eight OECD
countries (Canada, United States, France, UK, Germany, Japan, Australia and New Zealand).

2

For an assessment of weighing methodologies for composite indicators and an application to the Index of
Economic Well-being, see Sharpe and Andrews (2012).

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Choice of Specific Indicators
Criteria for the Choice of Domains and Indicators
The choice of domains and specific indicators for a composite index is very important as
this determines the path of the overall index.3 Indeed, one can consciously or unconsciously
manipulate the trend in an index by selecting variables that exhibit a strong upward or downwardbias.
In relation to the B.C. Prosperity Index, the key criterion for inclusion has been theperceived importance of the indicators or variables from the perspective of B.C.’s prosperity,
mainly based on an assessment by BCBC with advice provided by CSLS.
Once decisions were made on what is important and a number of potential indicators had
been identified, these indicators were in turn assessed on a few criteria: measurability, ability to
be understood or simplicity, availability of data, and data timeliness. These criteria are discussed
below.
An obvious criterion for inclusion of an indicator in a composite index is that theindicator can be measured or made quantifiable, that it is captured quantitatively, preferably by astatistical office. Abstract concepts to which a number cannot be applied are inappropriate for acomposite index.
An additional criterion is simplicity. It is important that the target audience for acomposite index can relate to the indicators included in the index. When the target audience
includes the general public, as is the case for the B.C. Prosperity Index, this means that theindicators must be relatively simple, easy to understand, and transparent.
It makes no sense to consider an indicator for a composite index if no data are available
for the indicator. Fortunately, Canada has high quality official statistics for many key indicators.
This greatly facilitates the construction of the composite index in this report.
In addition to data availability, it is important that indicators be timely. This means theyneed to be produced on a frequent basis, which means at least annually. Census data, which are
only produced every five years, and with a considerable lag from the reference day of the census,
consequently cannot be used in a composite index whose objective is to capture current or fairly
recent developments.

3

Hagerty et al. (2001) develop 14 criteria for determining the validity and usefulness of quality of life (QOL) indexes
and use these criteria to evaluate 22 QOL indexes. These criteria include the following: that the index has a clear
practical purpose; is relevant for public policy; is based on time series for monitoring; contains indicators that are
reliable, valid and sensitive; is grounded in well-established theory; can be reported as a single number, but can be
broken down into components; indicators can be measured in both objective and subjective dimensions; andindicators must be relevant for all people.

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Indicator Selection
The B.C. Prosperity Index reflects the choices made on what indicators comprise theindex. This section explains the choices for the 12 indicators (13 data series) selected forinclusion and gives details on the specific indicator used to capture the general indicator.
Business Environment Domain
The four indicators in this domain are labour productivity, investment, innovation, andeducation (or human capital).
Labour Productivity
Productivity is defined as the relationship between output and inputs. In the long run, thekey determinant of growth in the living standards of a population is the rate of productivity
growth. For this reason, the BCBC believes that a prosperity index should in principle include a
productivity measure, given the importance of the link between income and productivity.
There are numerous types and definitions of productivity, including partial productivity
measures such as labour productivity versus total factor productivity measures, total economy
versus business sector measures, persons employed versus hours worked measures, andproductivity growth rates versus productivity levels, each with advantages and disadvantages.
(Smith, 2004). Because of the complex and somewhat abstract nature of productivity definitions
and measurement, and the need for transparency in a composite index, it is important that any
productivity measure chosen for a composite index be relatively simple. In this regard, theBCBC believes that most appropriate productivity indicator is total economy real GDP per hour
worked.
In the standard growth accounting framework, labour productivity is determined byphysical investment, human capital or labour quality, and innovation or technological change.
The BCBC has selected these variables to be the three remaining indicators for the businessenvironment domain.
Investment
As noted, investment is a key driver of productivity growth. Through investment inmachinery and equipment, new technologies are introduced into production processes. Throughinvestment in plant and structures, the capacity to produce is augmented. Indeed, increased
capital per worker, or capital intensity, accounts for around one third of labour productivity
growth in Canada over the 2000-2016 period (Statistics Canada). Given the importance ofinvestment for a healthy business environment, BCBC has selected the share of non-residential
investment in GDP as an indicator.

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Innovation
Innovation, or technological change, whether embodied in new capital equipment or
disembodied in the form organizational innovation, is the most important driver of labour
productivity growth in the long run. The standard growth accounting framework identifies totalfactor productivity (TFP) growth as a proxy for innovation or technical change. But since TFP is
calculated as a residual, it captures the influence of many factors such as measurement error,
economies of scale, imperfect competition, and capacity utilization, that do not directly pertain to
innovation or technological change. For this reason, as well as data availability issues, TFP has
not been selected as the innovation indicator. BCBC believes that research and development
spending, a key input into the innovation effort, is a more appropriate indicator for innovationand has selected R&D intensity, defined as the R&D/GDP ratio, as the innovation indicator forthe business environment domain.
Education
Human capital is crucial for productivity advances as a qualified work force is needed tomake effective use of new technologies and of a larger and/or more modern capital stock.
Indeed, Statistics Canada estimates that higher labour quality accounted for 10 per cent of labour
productivity growth in the 2000-2016 period in Canada. In addition, higher levels of education ina population have many other positive effects for society and the economy, including higher
wages, a lower unemployment rate, higher employment rates, less crime, more civic participation(including voting), better health outcomes, higher marriage rates, and less family breakdown.
From this perspective, educational attainment can be a useful indicator of both the state of andtrends in the business environment as well as overall societal well-being. For this reason, BCBC
has selected a measure of education attainment for inclusion in the business environment
domain, namely the proportion of the population 25 and over with post-secondary education.
Economic Well-Being Domain.
The four indictors for this domain are two income measures (GDP per capita andhousehold income), along with the unemployment rate and housing affordability.
GDP per capita and household income
Income, especially when expressed in real or inflation adjusted terms, is very important
for living standards and economic well-being. There are many potential income indicators, allwith strengths and weaknesses from the perspective of a broad prosperity index. Income
measures can be based on different data sources (e.g. national accounts data, tax records,
household surveys), different definitions of income (post-tax income, total income with transfers,
market income, employment income). They can also be considered in absolute terms or for aunit of population (individuals or per capita, families, unattached individuals, households) and
can include or exclude economics of scale in consumption through an equivalence scale.
10The best-known aggregate income measure is Gross Domestic Product (GDP), which isdefined as the sum of all incomes earned in the economy.4 Indeed, real GDP growth isconsidered a manifestation of the dynamism of an economy, and real GDP per capita is
considered by many to be the best single proxy for living standards. Other important national
accounts aggregate income measures are personal income, which excludes profits and includes
government transfer payments, and disposable or after-tax personal income. These national
accounts-based income measures may lack transparency, as they include imputations such as
imputed rent for owner-occupied dwellings. They also include, in the definition of the household
sector, entities such as universities. Another limitation of national accounts-based income
measures is that they cannot be disaggregated by income group or household type.
Statistics Canada produces a number of household income measures based primarily on
tax data, with the median now the preferred metric. The most widely reported measure is medianafter-tax income for economic families and unattached individuals. After-tax income iscomprised of income from market sources and government transfers. Market income includes
employment income, retirement income and income from investments, while governmenttransfers include benefits to seniors, child benefits, Employment Insurance benefits, social
assistance and other benefits.
Given the close relationship between income and prosperity, BCBC has included two
income measures in the economic well-being domain of the B.C. Prosperity Index: real GDP per
capita and average household income,
Unemployment Rate
The unemployment rate is another important and often-cited metric of economic andsocial performance. A high unemployment rate is inconsistent with broadly-based prosperity.
The unemployment rate is defined as the number of unemployed persons over the labour force,
where the latter is the number of employed persons plus persons looking and available for work.
The unemployment rate’s strength is that it captures the degree of unemployed resources in theeconomy, defined as the difference between the actual unemployment rate and some definition of
the full employment unemployment rate. The unemployment rate, especially the long-term
unemployment rate, also serves as a hardship indicator, especially for certain groups such asheads of household. Given the importance of work for social connections, a sense of purpose inlife, and self-respect, not to mention income, the unemployment rate is closely related to

4

There are eight aggregate measures of income and product (gross domestic product (GDP), gross domestic
income (GDI), gross national product (GNP), gross national income (GNI), net domestic product (NDP), net
domestic income (NDI), net national product (NNP) and net national income (NNI)). Ross and Murray (2010)
discuss the implications of the eight measures for productivity and living standards analysis. They conclude that
GDP and NDP are the most appropriate measures of output for productivity analysis, while NNI is the mostappropriate measure of income for the analysis of living standards because it captures the impact on real incomeof terms of trade changes, net income received from abroad, and the sustainability of the capital stock.

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happiness. The unemployed are generally less happy than the employed.5One recognizedweakness of the official unemployment rate is that it does not capture all types of underutilization of labour, such as discouraged workers and involuntary part-time workers.
Given the close linkages between unemployment and prosperity, its simplicity, andbecause it is widely-understood, BCBC has selected the official unemployment rate to be part ofthe economic well-being domain of the B.C. Prosperity Index.
Housing affordability
A sense of prosperity can be greatly affected by the affordability of shelter. Even in areas
where employment opportunities are ample and wages high, if reasonably priced shelter is notavailable, living standard and economic well-being suffer. This is particularly the case in large
cities like Vancouver and Toronto where rents and housing prices are very high.
There are at least three well-known types of housing affordability indicators: theproportion of the population that spends above a certain proportion (30 per cent is the standard
threshold) of their income on shelter costs, the ratio of average (or median) rent or housing prices
to average (or median) household income, and the per cent of disposable income a householdspends on housing.
While the house price to income ratio is attractive for its simplicity, its relationship withprosperity is ambiguous. It could be viewed as negative or positive. Housing is an asset and a
consumption item. A rise in house prices negatively affects the budgets of all households, by
putting upward pressure on market and imputed shelter costs. Renters and young households (i.e.
those with no housing equity) aspiring to become home-owners are especially worse off, because
they need to sacrifice more current income to save for a larger mortgage down-payment. At thesame time, for the roughly two-thirds of Canadians who are already home-owners, rising house
prices make them wealthier. Another benefit for home-owners when house prices rise is that they
can leverage the unrealized capital gains in their property as collateral for residentially-secured
revolving lines of credit (“home-equity loans”). Home-owners can parlay their windfall gain inborrowing power and extend their balance sheets for home renovations, purchases of secondaryor rental properties, or current consumption.6
Given these conceptual difficulties and the availability of data for the three types ofjurisdictions, BCBC has chosen the proportion of disposable income a household spends on
5

A CSLS report (Sharpe et al, 2011) found that in 2007-2008 in Canada the average happiness of the unemployed
was 4.01 on a five-point life satisfaction scale, compared to 4.30 for the employed.
6
The house price to rent ratio is also complicated by the lack of good data for the denominator. In principle, it
should comprise the imputed shelter costs faced by the roughly two-thirds of households who live in dwellings
they also own, and the market rents faced by the roughly one-third of households who explicitly transact with alandlord. Rental dwellings tend to differ in quality, type and location from owner-occupied dwellings, so market
rents tend not to be good proxies for imputed rent.

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housing as the housing affordability measure in the economic well-being domain of the B.C.
Prosperity Index.
Societal Well-being Domain.
The four general variables for this domain are life expectancy, poverty rate, income
inequality, and the environment. In contrast to all of the other variables or indicators, theenvironment has two sub-indicators so there are actually five data series for this domain.
Life expectancy
An individual’s health status is a very important determinant of his or her well-being.
Persons with poor health status, especially mental health status, report lower levels of life
satisfaction. There are both subjective and objective summary indicators of health status. The
best objective aggregate indicator of the level of, and trends, in a population’s health status is life
expectancy, especially when life expectancy in measured in terms of disability-free years of life.
The best subjective measure of health status is self-reported health status, which can range fromexcellent to extremely poor. However, such data is not available for all jurisdictions. Thus,
BCBC has chosen life expectancy at birth as a simple, objective and widely available metric for
health in the societal well-being domain of the B.C. Prosperity Index.
Poverty rate
Poverty measures are of course based on income statistics. Poverty can be defined on an
absolute basis, such as the Low-income Cutoff (LICO) measure or the Market Basket Measure(MBM) measure, or in relative terms by the Low-Income Measure (LIM) -- defined as
proportion of the population below one-half median income. There are strengths and weaknesses
to both approaches. If the real income of all households doubled, absolute poverty would fall, but
relative poverty would be unchanged. On the other hand, the concept of poverty may include
social norms for consumption that evolve over time, and persons who cannot afford certain
consumer products can be considered relatively deprived.
In August 2018 the Government of Canada (ESDC, 2018) unveiled a national poverty
reduction strategy that included, for the first time, an official measure of poverty,7 namely theMarket Basket Measure, which is based on “the cost of a basket of goods and services that
individuals and families require to meet their basic needs and achieve a modest standard of living
in communities across the country.” A great advantage of this measure is that it is calculated at
the community level and captures the true cost of living for members in that community,
including housing costs. Unfortunately, the MBM poverty measure is only available for Canada
so cannot be included in the B.C. Prosperity Index which includes OECD countries and U.S.
7

For the first time, the Government of Canada has set ambitious and concrete poverty reduction targets: a 20 per
cent reduction in the MBM poverty rate to 10 per cent by 2020 from 12 per cent in 2015 and a 50 percent
reduction in poverty by 2030 to 6 per cent.

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states. Only the LIM measure is available for these other jurisdictions. Consequently, BCBC haschosen the after-tax low-income measure as the metric for poverty in the societal well-being
domain of the B.C. Prosperity Index.
Income inequality
The level of income inequality in a society can affect sense of societal well-being. If one
group has extreme levels of income and consumption, even if others are not suffering poverty
and are experiencing some increases in real income, many will feel a sense of relative
deprivation as they are not fully sharing in the overall prosperity.
There are a number of measures of income inequality. The best known, but likely theleast transparent income inequality metric is the Gini Coefficient, which is a summary statisticthat captures the overall distribution of income across a population and ranges. The value of theGini Coefficient can in principle range from 0 to 1, where 0 means that all households have thesame income and 1 means that all income goes to one household.
In the U.S. in recent years, the income share of the top 1 per cent of American households
has emerged as the most widely discussed measure of income inequality. It focuses on only asmall but extremely important part of the population and ignores income distribution
developments within the bottom 99 per cent. Ratios of the average or median income of different
income quartiles or deciles, such as the top quartile/decile to the bottom quartile/deciles, can beconstructed and used to track trends in income inequality.
Because it is such a well-known and widely available statistic, BCBC has chosen the Gini
Coefficient for income inequality in the societal well-being domain of the B.C. Prosperity Index.
Environment
The state of the environment is a major concern to the citizens of British Columbia for
their quality of life. Most environmental indicators, such as air and water quality, have been
improving over time. However, given the threat posed by climate change, as highlighted by arecent UN report on the topic (IPCC, 2018),8 the environmental indicator which receives by far
the greatest public attention these days is carbon dioxide (CO2) emissions.
For a number of reasons, including the implementation of a carbon tax by the B.C.
government in 2008, greenhouse gas emissions in British Columbia are falling, which is not thecase in many other jurisdictions. A time series index of emissions is one way to show how well
British Columbia is doing in addressing the climate change issue. However, given the trans8

The report found that the world’s most stringent climate-change goals will not be met by 2030 unless aggressive
action is taken in the next decade. To mitigate the effects of climate change on the environment, the report foundthat global net emissions of carbon dioxide would need to fall by 45 per cent from 2010 levels by 2030 and reachnet zero to keep warming within the 1.5 C range. Canada’s contributes around 1.6% to global GHG emissions, wellbehind China and the U.S.

14

border nature of greenhouse gas emissions, the future climate of the province will not be
determined by provincial emissions, but rather by global emissions, including from many otherjurisdictions, such as China and India, over which British Columbia has no control.
BCBC has chosen two sub-indicators to capture environmental performance in thesocietal well-being domain of the B.C. Prosperity Index, air pollution (as measured by PM 2.5
concentration); and per capita GHG emissions.

Data Sources and Issues
The construction of the B.C. Prosperity Index has encountered many challenges of a data
availability nature. Many of these challenges relate to the decision to include three types ofjurisdictions in the index, namely Canadian provinces, some other OECD countries and ahandful of U.S. states. The statistics are produced by the statistical authorities in these three typesof jurisdictions (Statistics Canada, OECD, U.S. national statistical offices such as the Bureau ofLabor Statistics and the U.S. Bureau of Economic Analysis), based on definitions and statisticalpriorities of the relevant jurisdictions. For some indicators, there are internationally accepted
definitions, but for many others there are not. The decision to include different types ofjurisdictions in the index leads to three specific problems with the 12 indicators, namely basic
data availability, length of the time series available, and data comparability across jurisdictions.
Basic Data Availability
The B.C. Prosperity Index in principle requires data series for 13 indicators/subindicators for three types of jurisdictions, or a total of 39 data series. The availability of a data
series for an indicator was certainly a consideration for selection of that indicator. The lack of adata series for one type of jurisdiction meant that a metric could not be adopted, even though it
might have been the most appropriate metric for a given indicator. In one instance, however,
BCBC decided that investment was needed as an indicator in the business environment domain.
But estimates for investment are not produced by the U.S. Bureau of Economic Analysis at thestate level, as is the case for Canadian provinces.
The decision to include investment as one of the four indicators in the businessenvironment domain even though such data are unavailable for U.S. states introduces a major
incomparability into the index. The business environment domains for the provinces and OECD
countries are calculated with four indicators, while those for the U.S. states have only three
indicators. This means that the index for the business environment domain is not comparable
between the provinces and OECD countries and U.S. states, (although the index for the otherthree indicators where there are data for all three types of jurisdictions are still comparable). The
incomparability extends to the overall Prosperity Index based on the three domains, given the
inclusion in the index of the incomparable business environment domain in the Prosperity Index.
It is now no longer possible to compare the Prosperity Index between British Columbia and the15three U.S. Pacific States, although comparisons can be made with the states for 12 of the 13
indicators/sub-indicators.
There is a similar problem with the housing affordability indicator, defined here as the
proportion of disposable income spent on housing. This metric does not appear to be available
for individual U.S. states, although it is available for major cities in the United States. A proxyvariable has been created for the three Pacific states, based on data for the major cities.
Length of the Time Series
For analysis of trends, it is desirable to construct as long a time series for the B.C.
Prosperity Index as possible. But the need for long-term data for 13 indicators/sub-indicators forthree types of jurisdictions poses major challenges, as certain time series are not available forlong periods. Since all indicators are needed to construct the overall index, this means that thelength of the time series for the B.C. Prosperity Index faces a “lowest common denominator”
problem: it can only be a long as the shortest available time series.
Exhibit 2 shows the length of the time series available for the 13 indicators/sub-indicators
for the three types of jurisdictions. The good news is that there are time series of at least 20 years
in duration for at least 21 indicator-jurisdiction combinations. The bad news is that at least one
indicator-jurisdiction combination only has data for four years, the 2013-2017 period. Unless one
is willing to drop this indicator from the Index, or drop this type of jurisdiction from the Index, inthis case the U.S. states which have by far the most data issues, or develop estimates for earlier
years for the missing indicator through backward extrapolation or another method, one is stuckwith a fairly short time series for the B.C. Prosperity Index. The BCBC decided to live with theshort time series for the B.C. Prosperity Index, as level comparisons of prosperity acrossjurisdictions are a higher priority than trend analysis at this time.
A related issue is the final year for the time series of the B.C. Prosperity Index. In
principle, the more recent the final year, the better. For the 38 indicator-jurisdiction
combinations for which we have data (Exhibit 2), 28 go to 2017 or later (one goes to 2018), and10 go to only 2016 or earlier (8 to 2016, 1 to 2015 and 1 to 2014). One could use 2017 as the
final year if one is willing to develop estimates for 2017 for the 10 indicator-jurisdiction
combinations before that year. This can be done by a linear extrapolation of past trends (say five
years), or in cases where there is no clear trend, the assumption that the 2017 value is unchanged
from that of the most recent years for which there is a value. This would mean that slightly morethan one quarter (10/38) of the indicator values for 2017 would not be based on real data. By
contrast, if 2016 were the terminal date for the time series, then less than 7 per cent (2/38) of theindicator values for 2016 would not be real data.
Because of the importance of having indicators as current as possible, the BCBC hasdecided to go with 2017 as the terminal date. It was felt that the benefit of being one year closer

16

to 2019 exceeded the cost of any potential inaccuracies from having to estimate values for 10
indicators for 2017.
Exhibit 2: Data Sources and Years of Availability

Domain 1: Business Environment
Labour productivity
Non-residential investment as share of GDP
Innovation: R&D Expenditure as share of GDP
Education (age 25-64) - percentage attained postsecondary education
Domain 2: Economic well-being
Real per capita GDP
Household Disposable Income Per Capita
Unemployment rate for persons 15 and overHousing Affordability - Percent of disposable
Incomea) Provincesb) Internationalc) USA

1997-2017
1997-2017
1997-2017

1997-2017
1997-2017
1997-20172005-2017
N/A
2005-2015

1997-2018

1997-20172005-2016

1997-2017
2000-2016
1990-2018

1997-2017
2000-2016
1997-2017

1997-2017
2000-2016
1976-20172010-20162013-20172005-2017

Domain 3: Societal well-being
1997-2017
2000-2017
2000-2014
Life Expectancy at Birth (in years)a
1976-20162004-20172005-2017
Poverty rate (Low Income Measure)a
1976-2017
2004-2017
2006-2017
Income distribution (after-tax Gini coefficient)bbb
2000-2017
1990-2017
1990-2017
Air pollution (PM 2.5 concentration)
2009-2016
1990-2014
2000-2015
Per capita GHG emissions
Notes: a) Countries have different time periods available. b) Only select years available pre-2000

Data Comparability Across Jurisdictions
Estimates for Canada and the United States are available from both the OECD and thenational statistical offices (NSO), Statistics Canada and the BLS and BEA for the U.S. But
because of definitional differences, the estimates for a number of indicators for the two countries
can differ significantly between the OECD and national statistical offices. Sub-national estimates
for the two countries are generally consistent with estimates from the national statistical offices,not with those of the OECD. This means that for sub-national estimates to be consistent with
OECD estimates, which are the benchmark for the comparison of the three types of jurisdictions,they must be adjusted by the OECD/NSO ratio for the national estimates.
Table 1 shows the Statistics and OECD values for Canada for 2016 for 3 indicators andfor the United States for 12 indicators where these are estimates for the states in the B.C.
Prosperity Index. For Canada, four of the 13 indicators/sub-indicators have identical values fromthe two sources, while nine have different values. For the United States, three have identicalvalues out of the 12 indicators/sub-indicators while nine have different values.
17For Canada, the discrepancies between the Statistics Canada and OECD estimates are
relatively small, the highest being 15.9 per cent for educational attainment. For the United States,
the discrepancies are larger, with six indicators showing 18 per cent or more. The largest islabour productivity at 37.0 per cent. The discrepancy is also large for greenhouse gas emissions.
The OECD definition is 26.3 per cent larger because it includes all greenhouse gases while theU.S. government definition includes only CO2 emissions.
The discrepancies are used to adjust the estimates from the national statistical offices tomake them comparable with the OECD estimates for the country. These adjustment factors areapplied to the sub-national estimates to ensure comparability with the country estimates
produced by the OECD. The excel database for this report provides all of the raw estimates.

18

Table 1: Comparison of Data Sources - OECD vs NSOs, 2016 Figures for Canada and the United States

CanadaCanadaOECD

Diff. %

US

United States
OECD

A

B

(𝐴 − 𝐵)/𝐴
∗ 100

A

B

(𝐴 − 𝐵)/𝐴∗ 100

Labour productivity

46.50

48.92

-5.20

46.32563.467-37.01

Non-residential investment asshare of GDP

15.25

14.31

6.17

n.a.

n.a.

n.a.

1.70

1.60

5.49

2.740

2.744

-0.15

66.89

56.27

15.89

38.49245.666-18.64

Real per capita GDP

44,81944,8190.00

57,84557,7970.08

Household Disposable
Income Per Capita

22,49922,4990.00

40,04540,045

0.00

Unemployment rate for
persons 15 and over

7.00

6.99

0.12

4.93

4.87

1.35

Housing Affordability Percent of disposable Income

22.00

21.00

4.55

25.75

19.00

26.23

Life Expectancy at Birth (inyears)

81.90

81.90

0.00

78.60

78.60

0.00

Poverty rate (Low Income
Measure)

13.00

12.40

4.62

15.10

17.80

-17.88

Income distribution (after-tax
Gini coefficient)

0.31

0.31

-0.33

0.48

0.39

18.95

Air pollution (PM 2.5
concentration)

6.48

6.48

0.00

7.38

7.38

0.00

Per capita GHG emissions

20.59

19.40

5.77

15.96

20.21

-26.64

Source:Innovation: R&D Expenditure
as share of GDP
Educational attainment (age25-64) - percentage attained
post-secondary education

Diff. %

Results for the B.C. Prosperity Index
This section of the report presents the results for the B.C. Prosperity Index by indicatorand by domain, comparing the results for British Columbia with those for the three types ofjurisdictions, provinces, international and U.S. states. The B.C. Prosperity Index has been
compiled for 21 jurisdictional units: ten Canadian provinces, eight OECD countries (New
Zealand, Japan, UK, United States, Australia, France, and Germany) and three U.S. states(California, Oregon and Washington). The focus of this report is on the situation in 2017, themost recent year for which estimates are compiled. Time trends are also briefly discussed.
19

Business Environment
The business environment domain consists of four indicators, labour productivity, investment,
innovation as proxied by R&D spending, and education.
Labour productivity
Labour productivity is defined as real GDP per hour worked for the aggregate or total
economy, measured in 2010 U.S. dollars at purchasing power parity exchange rates. In British
Columbia in 2017. this figure was $48.41 per hour (Appendix Table 5). As Chart 1 shows,
British Columbia ranked 5th among the 10 provinces, and would place 7th among the eight OECD
countries and last among the three U.S. Pacific states, on this indicator. Out of the 21
jurisdictions, B.C. ranked 14th.
In terms of the Canadian provinces, British Columbia’s productivity level was well belowthat of the three oil-producing provinces, Alberta, Newfoundland and Labrador andSaskatchewan, due to the very high value-added per hour levels in the oil and gas sector. British
Columbia had a similar labour productivity as Ontario.
In terms of the eight OECD countries, only New Zealand and Japan had a lower level oflabour productivity than B.C. in 2017.
The three U.S. Pacific states greatly out-performed British Columbia in terms of labour
productivity levels. Output per hour in California in 2017 was 60.0 per cent higher than in British
Columbia in 2017, while it was 49.6 per cent higher in Washington and 21.3 per cent higher in
Oregon.
Data on labour productivity are available for the 2005-2017 period for all three types ofjurisdictions. Over this period, output per hour increased 16.4 per cent in British Columbia. This
was the 10th fastest growth rate among the 21 jurisdictions (Appendix Table 5).

20

Chart 1: Labour Productivity, GDP per Hour Worked, 2017 (2010 U.S. Dollars at PPP)

Prince Edward Island
Nova Scotia
New Brunswick
QuebecManitoba
British Columbia
Ontario
Alberta
Saskatchewan
Newfoundland and Labrador
New ZealandJapan
United Kingdom
CanadaAustralia
FranceGermany
United States
OregonWashington
California
0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

U.S. Dollars per Hour Worked

Investment
The indicator for investment performance in the Index is non-residential investment,
including both business and government, as a share of nominal GDP. In British Columbia in
2017, this figure was 14.07 per cent (Appendix Table 6). As Chart 2 shows, British Columbia
ranked 5th among the 10 provinces and would place 7th among the eight OECD countries.
Unfortunately, the U.S. Bureau of Economic Statistics, unlike Statistics Canada, does notproduce estimates on investment by state. Out of the 18 jurisdictions for which data are
available, B.C. ranked 11th.
In terms of the Canadian provinces, British Columbia’s non-residential investment/GDP
share was again well below that of the three oil-producing provinces, Alberta, Newfoundlandand Labrador and Saskatchewan, due to their capital-intensive energy sectors.
21

In terms of the eight OECD countries, only Canada and the United States had a lower
non-residential investment/GDP share in 2017 than British Columbia.
As noted, no data on investment are available for the three U.S. Pacific states.
Data on investment are available for the 1981-2017 period for the two types ofjurisdictions. Over this period, the non-residential/GDP share in British Columbia fluctuatedconsiderably and showed no overall trend. This was also the case in the other jurisdictions(Appendix Table 6).
The industry composition of a province affects the investment share, because energyintensive provinces tend to have higher investment/GDP shares. A comparison of machinery andequipment investment shares would be less affected by industry structure. Unfortunately,comparable data for OECD countries for this indicator could not be found.
Chart 2: Non-Residential Investment as a Share of GDP, 2017 (Per Cent)

Prince Edward Island
Ontario
QuebecNew Brunswick
Nova Scotia
British Columbia
Manitoba
Saskatchewan
Alberta
Newfoundland and Labrador
CanadaUnited States
FranceJapan
Germany
United Kingdom
Australia
New Zealand
0.00

5.00

10.00

15.00

20.00

25.00

30.00

Per cent of GDP

Innovation
Innovation is proxied by R&D intensity, defined as total R&D expenditures as a share of
nominal GDP. In British Columbia in 2017 this figure was 1.37 per cent (Appendix Table 7). As
Chart 3 shows, British Columbia ranked 3rd among the 10 provinces (tied with Nova Scotia) andwould place 7th among the eight OECD countries and last measured against the three U.S. Pacificstates. Out of the 21 jurisdictions, B.C. ranked 13th.
22

In terms of the Canadian provinces, British Columbia’s R&D intensity was only
exceeded by Quebec (2.02 per cent) and Ontario (1.72 per cent).
In terms of the eight OECD countries, only New Zealand had a lower level of R&D
intensity than B.C.
The three U.S. Pacific states again greatly out-performed British Columbia in R&D
intensity. R&D as a share of GDP in California in 2017 was 5.3 per cent, nearly four times thatof British Columbia. Washington’s R&D intensity, at 4.3 per cent, was three times that of B.C.
while Oregon R&D intensity at 3.5 per cent was two- and one-half times that of B.C.
Data on R&D intensity are available for the 2006-2017 period for all three types ofjurisdictions. Over this period, R&D intensity was relatively stable in B.C. (1.29 per cent in2006). The trend was mixed in the other jurisdictions, with large falls in Quebec and Ontario andsignificant increases in Germany, California and Oregon (Appendix Table 7).
Chart 3: Gross Domestic Spending on R&D as a Percentage of GDP, 2017 (Per Cent)

Saskatchewan
Alberta
New Brunswick
Newfoundland and Labrador
Manitoba
Prince Edward Island
Nova Scotia
British Columbia
Ontario
QuebecNew Zealand
CanadaUnited Kingdom
Australia
FranceUnited States
GermanyJapan
OregonWashington
California
0.00

1.00

2.00

3.00
Per cent of GDP

23

4.00

5.00

6.00

Education
Education is captured by the share of the population aged 25 and over who have attained
tertiary education, commonly known as post-secondary education. In British Columbia in 2017.
this figure was 56.2 per cent (Appendix Table 8). As Chart 4 shows, British Columbia ranked
3rd among the 10 provinces, and would place 2nd among the eight OECD countries and first if
measured along with the three U.S. Pacific states. Out of the 21 jurisdictions, B.C. ranked 4th -a strong showing.
In terms of the Canadian provinces, in B.C. the share of the population with tertiary
education was only exceeded by Quebec (59.2 per cent) and Ontario (56.9 per cent).
In terms of the eight OECD countries, only Canada has a higher share of the population
with tertiary education than B.C., at 56.7 per cent.
British Columbia outperformed the three U.S. Pacific states on educational attainment,with California having 47.7 per cent of its 25 and older population with tertiary education,
Oregon at 48.3 per cent and Washington 52.4 per cent.
Data on educational attainment exists for the 2005-2017 period for all three types ofjurisdictions. Over this period, the share of the 25 and older population with tertiary education
increased 10 percentage points in B.C., going from 45.5 per cent in 2005 to 56.2 per cent in2017. All provinces in Canada except Prince Edward Island experienced similar increases, as did
the three U.S. Pacific states and the eight OECD countries except Germany (Appendix Table 8).

24

Chart 4: Educational Attainment, Share of Population that Completed Tertiary Education, 2017 (Per Cent)

Prince Edward Island
Manitoba
Saskatchewan
New Brunswick
Nova Scotia
Newfoundland and Labrador
Alberta
British Columbia
Ontario
QuebecGermany
FranceNew ZealandAustralia
United Kingdom
United States
Japan
CanadaCalifornia
OregonWashington
0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

Per Cent

Overall Business Environment Domain
The actual values for the indicators for the business environment can be expressed asindexes (Appendix Table 2) and the indices then weighted to produce an overall index value forthe business environment domain. The indicators are equally weighted. A major problem for thisdomain is that data are not available on investment for the three U.S. states. This means thatinvestment must be excluded from the calculation of the overall domain value to preservecomparability between U.S. states and the two other types of jurisdictions.
In British Columbia in 2017, the overall index for the business environment based on thefour indicators is given a value of 1 (Appendix Table 2). As Chart 5 shows, British Columbia
ranked 6th among the 10 provinces and would place 7th among the eight OECD countries. Out of
the 18 jurisdictions for which data are available for all four indicators, B.C. ranked 11th. A

25

business environment index based on only three indicators (excluding investment) shows that
B.C. ranks well behind for the three U.S. states (Appendix Table 2).
In terms of the Canadian provinces, B.C. had a lower index value for the businessenvironment domain than Newfoundland and Labrador (123.7), Alberta (109.4), Quebec (107.1),
Saskatchewan (104.5) and Ontario (104.1).
In terms of the eight OECD countries, only New Zealand (92.1) and the UK (97.70) had
a lower value for the business environment domain in 2017 than British Columbia.
As noted, no data on the investment indicator used in the Index are available for the three
U.S. Pacific states.
Data on the index value for the business environment domain are available for the 19972017 period for the two types of jurisdictions for which values exist for all four indicators. B.C.
recorded the largest increase among the ten provinces and of all eight OECD countries.
(Appendix Table 2).

26

Chart 5: Business Environment Index, 2017 (B.C. in 2017 = 100)

Prince Edward Island
New Brunswick
Nova Scotia
Manitoba
British Columbia
Ontario
Saskatchewan
QuebecAlberta
Newfoundland and Labrador
New ZealandUnited Kingdom
CanadaAustralia
FranceGermany
United StatesJapan
OregonWashington
California
0

50

100

150

200

250

Index (B.C. in 2017 = 100)

Economic Well-Being
The economic well-being domain consists of four indicators: GDP per capita, householdincome per capita, the official unemployment rate, and a measure of housing affordability.
GDP per capita
Real GDP per capita is measured in 2010 U.S. dollars at purchasing power parity
exchange rates. In British Columbia in 2017, this figure was $46,988 (Table 9 in the Appendix).
As Chart 6 shows, British Columbia ranked 4th among the 10 provinces, and it would place 4th
among the eight OECD countries and last among the three U.S. Pacific states. Out of the 21
jurisdictions, B.C. ranked 11th.
In terms of the Canadian provinces, British Columbia’s level of real GDP per capita waswell below that of the three oil-producing provinces, Alberta, Newfoundland and Labrador and27

Saskatchewan, due to the very high GDP per capita levels in the oil and gas sector. British
Columbia had a slightly higher level of GDP per capita than Ontario.
In terms of the eight OECD countries, only the United States, Germany and Australia had
a higher level of GDP per capita.
The three U.S. Pacific states greatly out-performed British Columbia in terms of percapita income. Real GDP per capita in California in 2017 was 49.6 per cent higher than in British
Columbia, while it was 49.1 per cent higher in Washington, and 21.3 per cent higher in Oregon.
Data on real GDP per capita are available for the 1997-2017 period for all three types ofjurisdictions. Over this period, output per hour increased 90.3 per cent in British Columbia. This
was the third slowest growth rate among the 10 provinces, with only Quebec and Ontario slower.
Among the eight OECD countries, four countries had slower growth rates (Canada, UnitedStates, Japan and the UK) and four higher. Over the 2005-2017 period all three U.S. Pacificstates experienced faster real GDP per capita growth than B.C. Out of the 21 jurisdictions, B.C.
had the fifth slowest growth rate (Appendix Table 9).

28

Chart 6: Real GDP per Capita, 2017 (Current U.S. Dollars at PPP)

Prince Edward Island
Nova Scotia
New Brunswick
QuebecManitoba
Ontario
British Columbia
Newfoundland and Labrador
Saskatchewan
Alberta
New ZealandFranceJapan
United Kingdom
CanadaAustralia
Germany
United States
OregonWashington
California
0

10,00020,00030,00040,00050,00060,00070,00080,000Current U.S. Dollars (PPP)Household income
Household disposable income per capita is measured in 2010 U.S. dollars at purchasing
power parity exchange rates and comes from the Regional Economy section of OECD Stat for all
three types of jurisdictions. In British Columbia in 2017, this figure was $24,976 (Table 10 in the
Appendix). As Chart 7 shows, British Columbia ranked second among the 10 provinces on thisindicator, and it would place third among the eight OECD countries and last among the three
U.S. Pacific states. Out of the 21 jurisdictions, B.C. ranked seventh.
In terms of the Canadian provinces, British Columbia’s level of disposable household per
capita income was only exceeded by that of Alberta
In terms of the eight OECD countries, only the United States and Australia had higher
household disposable incomes per capita. Disposable household income per capita in the UnitedStates is significantly higher (63.1 per cent) due to higher money incomes and lower taxes.
29Given the higher disposable income in the United States, the three Pacific states not
surprisingly have much higher after-tax incomes than B.C. Disposable income per capita in
California in 2017 was 81.1 per cent higher than in British Columbia, while it was 80.2 per centhigher in Washington, and 40.2 per cent higher in Oregon.
Data on real disposable household income per capita are available for the 2020-2017
period for all three types of jurisdictions. Over this period, it increased 52.0 per cent in British
Columbia. This was the third fastest growth rate among the 10 provinces, with only
Saskatchewan and Newfoundland and Labrador seeing bigger gains. Among the eight OECD
countries, B.C. had the fastest growth. Over the 2005-2017 period B.C. had faster disposable
income growth than all the U.S. Pacific states. Out of the 21 jurisdictions, B.C. had the third
slowest disposable income per capita growth rate (Appendix Table 10).
Chart 7: Per Capita Household Disposable Income, 2017 (2010 U.S. Dollars at PPP)

QuebecPrince Edward Island
Nova Scotia
Manitoba
New Brunswick
Ontario
Saskatchewan
Newfoundland and Labrador
British Columbia
Alberta
New ZealandFranceJapan
United Kingdom
CanadaGermany
Australia
United States
OregonWashington
California
05,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000
2010 U.S. Dollars (PPP)30

Unemployment rate
Unemployment is measured by the official unemployment rate for persons 15 and over.
In British Columbia in 2017, this figure was 5.1 per cent (Appendix Table 11). As Chart 8
shows, British Columbia had the lowest unemployment rate among the 10 provinces, and it
would place sixth among the eight OECD countries and last among the three U.S. Pacific states.
Out of the 21 jurisdictions, B.C. ranked ninth in the unemployment rate.
In terms of the Canadian provinces, British Columbia’s unemployment rate was at least
one percentage lower than all the other provinces except Manitoba (5.4 per cent) in 2017.
In terms of the eight OECD countries, the United States, Germany, the UK, Japan and
New Zealand all had a lower unemployment rate.
The three U.S. Pacific states also had lower unemployment rates than British Columbia,
although roughly equal to the U.S. figure: California (4.7 per cent), Washington (4.8 per cent),
and Oregon (4.4 per cent).
Data on the official unemployment rate are available for the 1997-2017 period for all
three types of jurisdictions. Over this period, unemployment fell 3.4 percentage points in B.C.
from 8.5 per cent in 1997. Only the three Maritime provinces and Quebec enjoyed larger falls in
the unemployment rate. Among OECD countries only Germany experienced a larger fall in
unemployment. The fall in the unemployment rate in B.C. was much larger than in the three U.S.
Pacific states. Out of the 21 jurisdictions, B.C. had the fifth largest decline in the unemployment
rate (Appendix Table 11).

31

Chart 8: Unemployment Rate, 2017 (Per Cent)

British Columbia
Manitoba
Ontario
QuebecSaskatchewan
Alberta
New Brunswick
Nova Scotia
Prince Edward Island
Newfoundland and Labrador
Japan
Germany
United Kingdom
United States
New ZealandAustralia
CanadaFranceOregonCalifornia
Washington
0

2

4

6

8

10

12

14

16

Per Cent

Housing Affordability
Housing affordability is measured by the share of disposable income spent on housing. In
British Columbia in 2017, this figure was 22.7 per cent (Appendix Table 12). As Chart 9 shows,
British Columbia had the second worst housing affordability (i.e., the second highest income
share spent on housing) among the 10 provinces, and it would place third lowest in terms of
housing affordability among the eight OECD countries and last among the three Pacific states.
Out of the 21 jurisdictions, B.C. was the fourth least affordable in terms of housing.
Among the Canadian provinces, only residents of Ontario spent a larger proportion of
their disposable income on housing (23.9 per cent).
In terms of the eight OECD countries, only households in New Zealand and the UK
spent more on housing than households in B.C.
32

Perhaps surprisingly, the three U.S. Pacific states also had considerably greater housing
affordability than British Columbia, with 19.1 per cent of disposable income going to housing in
California, 18.4 per cent in Oregon and 18.1 per cent in Washington.
Data on housing affordability are only available for the 2013-2017 period for all three
types of jurisdictions. Over this period, housing affordability improved in B.C., with the income
share devoted to housing falling slightly by 2.0 points. No other province, none of the eight
OECD countries and none of the three U.S. Pacific states experienced an improvement of thismagnitude (Appendix Table 12). However, this short-term development should not obscure themore fundamental point that B.C. has expensive housing relative to incomes when compared tomost other advanced economy jurisdictions.

33

Chart 9: Housing Affordability, Percentage of Household Disposable Income Spent on Housing, 2017 (Per Cent)

Newfoundland and Labrador
New Brunswick
Prince Edward Island
Manitoba
Saskatchewan
Nova Scotia
QuebecAlberta
British Columbia
Ontario
United States
Germany
Australia
FranceJapan
CanadaUnited Kingdom
New Zealand
Washington
OregonCalifornia
0

5

10

15

20

25

30

Per Cent

Overall Economic Well-Being Domain
The actual values for the indicators of the economic well-being domain can be expressed
as indexes (Appendix Table 3), and the indices then weighted to produce an overall index value
for the domain. The indicators are equally weighted.
In British Columbia in 2017, the overall index for the economic well-being domain,
based on the four indicators, is given a value of 100.0 (Table 3 in the Appendix). As Chart 10
shows, British Columbia ranked fourth among the 10 provinces and would place fifth among the34eight OECD countries and last among the three U.S. Pacific states on overall economic wellbeing, as computed for the Index. Out of the 21 jurisdictions, B.C. ranked 11th.
In terms of the Canadian provinces, B.C. had a lower index value for the economic wellbeing domain than Newfoundland and Labrador, Alberta, and Saskatchewan.
In terms of the eight OECD countries, Germany, Japan, Australia and the United States
had a higher value for the economic well-being domain in 2017 than British Columbia.
The three U.S. Pacific states had much higher values for economic well-being than B.C.,
with Washington 40.2 per cent higher, California 39.4 per cent higher and Oregon 25.4 per centhigher.
Data on the index value for the economic well-being domain are available for the 20132017 period for the three types of jurisdictions. B.C. enjoyed the largest increase among the ten
provinces during this relatively short period; only three OECD countries did better than B.C.
(United States and UK and perhaps surprisingly Japan), as did all three Pacific states. Out of 21
jurisdictions, B.C. had the seventh biggest increase in economic well-being. (Appendix Table 3).

35

Chart 10: Economic Well-Being Index (B.C. in 2017 = 100)

Prince Edward Island
Nova Scotia
New Brunswick
QuebecOntario
Manitoba
British Columbia
Saskatchewan
Alberta
Newfoundland and Labrador
FranceNew Zealand
CanadaUnited Kingdom
Australia
GermanyJapan
United States
OregonCalifornia
Washington
0

20

40

60

80

100

120

140

160

Index (B.C. in 2017 = 100)Societal Well-Being Domain
The societal well-being domain consists of four indicators: life expectancy, the poverty rate,income inequality, and environment. The environment indicator is composed of two subindicators: air quality and per capita greenhouse gas emissions.
Life expectancy
Life expectancy is measured in years of expected lifetime at birth. In British Columbia in
2017, this figure was 82.3 years (Table 13 in the Appendix). As Chart 11 shows, British
Columbia ranked 3rd among the 10 provinces on life expectancy, and it would place 4th among
the eight OECD countries and first among the three U.S. Pacific states. Out of the 21
jurisdictions, B.C. ranked 6th.
In terms of the Canadian provinces, British Columbia’s life expectancy was well abovethat of the Western Canadian provinces. British Columbia had only a slightly lower life
expectancy than Ontario and Quebec.
36

In terms of the eight OECD countries, Japan had a much higher life expectancy than
British Columbia and the other seven countries. France and Australia had a life expectancy
slightly above that of B.C.
British Columbia handily outperformed the three Pacific states in average life
expectancy. Life expectancy in California in 2017 was 2.9 years lower than in British Columbia,
while it was 3.1 years lower in Washington, and 3.6 years lower in Oregon.
Data on life expectancy are available for the 2005-2017 period for all three types ofjurisdictions. Over this period, life expectancy increased 2.1 per cent in British Columbia. This
was the 9th best showing among the 21 jurisdictions (Appendix Table 13).
Chart 11: Life Expectancy at Birth, 2017 (Years)

Newfoundland and Labrador
Manitoba
Saskatchewan
Nova Scotia
New Brunswick
Alberta
Prince Edward Island
British Columbia
QuebecOntario
United States
Germany
United Kingdom
New Zealand
CanadaFranceAustralia
Japan
OregonWashington
California
75

76

77

78

79

80
Years

37

81

82

83

84

85

Poverty rate
The poverty rate is measured in the Index as the share of the population in low income.
The threshold for low-income status differs in different data sources, so the numbers are adjusted
to the level of the OECD data. In British Columbia in 2017, this figure was 11.9 per cent(Appendix Table 14). As Chart 12 shows, British Columbia ranked 3rd among the 10 provincesin the incidence of poverty, and it would place 5th among the eight OECD countries and firstamong the three U.S. Pacific states. Out of the 21 jurisdictions, B.C. ranked 6th.
In terms of the Canadian provinces, British Columbia’s poverty rate was 4.3 percentage
points higher than that in its neighbour, Alberta. It was slightly above Saskatchewan’s rate (0.9
percentage points), and slightly below that of Manitoba (0.6 percentage points). Ontario andQuebec both had higher poverty rates, as did the Atlantic provinces.
In terms of the eight OECD countries, France had a significantly lower poverty rate than
British Columbia. Germany, New Zealand, and the United Kingdom also had lower poverty
rates. The poverty rates in Japan and the United States were significantly higher than in BC.
British Columbia easily outperformed the three U.S. Pacific states in the incidence ofpoverty. The poverty rate in California in 2017 was 6.5 percentage points higher than in British
Columbia, while it was 6.3 percentage points higher in Washington and 3.0 percentage points
higher in Oregon.
Data on poverty rates are available for the 2013-2017 period for all three types ofjurisdictions. Over this relatively brief period, the poverty rate decreased by 15.2 per cent in
British Columbia. This was the largest decline among the 21 jurisdictions (Appendix Table 14).

38

Chart 12: Poverty Rate, Per Cent of Population Living Under Poverty Line, 2017 (Per Cent)

Alberta
Saskatchewan
British Columbia
Manitoba
Ontario
QuebecPrince Edward Island
New Brunswick
Newfoundland and Labrador
Nova Scotia
FranceGermany
New ZealandUnited Kingdom
Australia
CanadaJapan
United States
Washington
OregonCalifornia
0

2

4

6

8

10

12

14

16

18

20

Per Cent

Income Inequality
Income inequality is measured in the Index using the Gini coefficient. It is usually
expressed as an index ranging from 0 to 1, where a value of 1 would indicate maximal inequality(i.e., one individual has all the income or wealth). In British Columbia in 2017, this figure was
0.300 (Appendix Table 15). As Chart 13 shows, British Columbia ranked 6th among the 10
provinces, and would place 3rd among the eight OECD countries and first among the three U.S.
Pacific states. Out of the 21 jurisdictions, BC ranked 8th.
In terms of the Canadian provinces, British Columbia’s Gini coefficient was similar to
those for the other Western provinces. The Gini coefficient was higher in Ontario (0.320). The
lowest Gini coefficients in Canada were found in New Brunswick (0.274), Prince Edward Island(0.277), and Quebec (0.286).

39

In terms of the eight OECD countries, France and Germany had a lower Gini coefficientthan British Columbia (0.291 and 0.293, respectively). The Gini coefficient was much higher in
the United States, at 0.391.
British Columbia greatly outperformed the three U.S. Pacific states in terms of income
inequality. The Gini coefficient in California in 2017 was 0.095 points higher than in British
Columbia in 2017, while it was 0.072 points higher in Oregon, and 0.070 percentage points
higher in Washington.
Data on Gini coefficients are available for the 2013-2017 period for all three types ofjurisdictions. Over this period, the Gini coefficient decreased by 6.2 per cent in British
Columbia. This was the second-largest decline among the 21 jurisdictions, surpassed only byAlberta (Appendix Table 15).
Chart 13: Gini Coefficient, 2017

New Brunswick
Prince Edward Island
QuebecNova Scotia
Alberta
British Columbia
Manitoba
Saskatchewan
Newfoundland and Labrador
OntarioFranceGermany
CanadaAustraliaJapan
New ZealandUnited Kingdom
United States
Washington
OregonCalifornia
0.00

0.05

0.10

0.15

0.20

0.25

Gini Coefficient

40

0.30

0.35

0.40

0.45

Air Quality
Air pollution in the Index is measured using the mean population exposure to fineparticles with a diameter of 2.5 micrometers or less (PM2.5 particles), expressed in micrograms
per cubic meter. In British Columbia in 2017, this figure was 5.94 micrograms per cubic meter(Table 16 in the Appendix). As Chart 14 shows, British Columbia ranked 6th among the 10
provinces on this measure, and it would place first among the eight OECD countries and thirdamong the three U.S. Pacific states. Out of the 21 jurisdictions, BC ranked 8th.
In terms of the Canadian provinces, British Columbia’s population exposure to PM2.5
was 6.8 per cent lower than in neighbouring Alberta. It was also lower than in Saskatchewan(29.2 per cent), but higher than in Manitoba (15.5 per cent). Finally, the exposure to PM2.5 was
also lower in B.C. compared to both Ontario and Quebec.
In terms of the eight OECD countries, all had higher population exposure to PM2.5 than
B.C. The difference was most marked with Germany, France, and Japan, which had rates about
twice the rate in BC. The figure for the United States was 24.0 per cent higher than in B.C.
Compared to the three Pacific states, British Columbia had higher population exposure toPM2.5 than Washington and Oregon. However, it had lower exposure than in California.
Data on air pollution are available for the 2000-2017 period for all three types ofjurisdictions. Over this period, exposure to PM2.5 decreased by 20.5 per cent in British
Columbia. This was the 13th largest decline among the 21 jurisdictions (Appendix Table 16).

41

Chart 14: Mean Population Exposure to PM2.5, 2017 (Micrograms per Cubic Metra)

Prince Edward Island
Nova Scotia
New Brunswick
Newfoundland and Labrador
Manitoba
British Columbia
Alberta
Ontario
QuebecSaskatchewan
New Zealand
CanadaUnited States
Australia
United Kingdom
Japan
FranceGermany
Washington
OregonCalifornia
0

2

4

6

8

10

12

14

Micrograms per cubic metre

Greenhouse Gas Emissions
Another indicator related to the environment is emissions of greenhouse gases (GHG). It
is measured here in per capita terms, expressed in tonnes per capita. In British Columbia in 2017,
this figure was 14.6 kilotonnes per capita (Appendix Table 17). As Chart 15 shows, British
Columbia ranked 4th among the 10 provinces, and it would place 5th among the eight OECD
countries and 4th among the three U.S. Pacific states. Out of the 21 jurisdictions, B.C. ranked
11thin per capita GHG emissions.
In terms of the Canadian provinces, British Columbia’s GHG emissions per capita weremuch lower (about four times lower) than in Alberta and Saskatchewan, due to the impact of theoil and gas industries on overall GHG emissions in those provinces. Emissions were similar in42

Manitoba (14.9 kilotonnes per capita). Emissions were lower than in B.C. in three provinces:
Quebec, Ontario, and Prince Edward Island.
In terms of the eight OECD countries, emissions were lower in 2017 in France, theUnited Kingdom, Japan, and Germany. The figure for the United States was 36.7 per cent higher
than in B.C.
Compared to the three U.S. Pacific states, British Columbia had higher GHG emissions
per capita than all three.
Data on GHG emissions are available for the 2009-2017 period for all three types ofjurisdictions. Over this period, emissions decreased by 1.7 per cent in British Columbia. This
was the 17th largest decline among the 21 jurisdictions (Appendix Table 17). In three of the 21
jurisdictions, GHG emissions per capita increased over the period (Newfoundland and Labrador,
Washington, and Japan).

43

Chart 15: Per Capita GHG Emissions, 2017 (Kilotonnes per Capita)

QuebecOntarioPrince Edward Island
British Columbia
Manitoba
Nova Scotia
Newfoundland and Labrador
New Brunswick
Alberta
Saskatchewan
FranceUnited Kingdom
Japan
Germany
New Zealand
CanadaUnited States
Australia
California
OregonWashington
0

10

20

30

40

50

60

70

Kilotonnes per Capita

Overall Societal Well-being Domain
The actual values for the indicators of the societal well-being domain can be indexed andthe indices then weighted to produce an overall index value for the societal well-being domain(Appendix Table 4). The indicators are equally weighted.
In British Columbia in 2017, the overall index for the societal well-being domain basedon the five indicators/sub-indicators is given a value of 100.0. As Chart 16 shows, British
Columbia ranked fifth among the 10 provinces, and it would place third among the eight OECD
countries and first among the three U.S. Pacific states in societal well-being. Out of the 21
jurisdictions, BC ranked 7th.

44

In terms of the Canadian provinces, B.C. had a lower index value for the societal wellbeing domain than Prince Edward Island, Alberta, Quebec and Manitoba.
Compared to the eight OECD countries, only Germany and France had a higher value forthe societal well-being domain in 2017 than British Columbia.
The three Pacific states had much lower values for societal well-being than B.C., with
Washington 44.6 per cent lower, California 32.1 per cent lower, and Oregon 25.5 per cent lower.
Data on the index value for the societal well-being domain are available for the 20132017 period for the three types of jurisdictions. B.C. enjoyed the largest increase – i.e., thebiggest improvement in societal well-being as measured in the Index – among the ten provinces,among all eight OECD countries and among all three U.S. Pacific states. Out of 21 jurisdictions,
B.C. recorded the greatest increase in societal well-being during the 2013-2017 period.
(Appendix Table 4).

45

Chart 16: Societal Well-Being Index (B.C. in 2017 = 100)

Saskatchewan
Newfoundland and Labrador
Nova Scotia
New Brunswick
Ontario
British Columbia
Manitoba
QuebecAlberta
Prince Edward Island
United States
United Kingdom
Australia
Japan
CanadaNew ZealandGermany
FranceWashington
California
Oregon
0

20

40

60

80

100

120

140

Overall B.C. Prosperity Index
The actual values for the indicators of for the three domains (business environment,
economic well-being and societal well-being) can be expressed in indexes (Appendix Table 2-4),
and the indices then weighted to produce an overall index value. The indicators are equallyweighted. A major problem for the business environment domain is that data are not available on
investment for the three U.S. states. This means that investment must be excluded from thecalculation of the overall B.C. Prosperity Index for the three U.S. states, affecting thecomparability of the Index between U.S. states and the two other types of jurisdictions.9
In British Columbia in 2017, the overall value for B.C. in the Prosperity Index based on
the 12 indicators is given a value of 1 or 100.0 (Appendix Table 1). As Chart 17 shows, British
Columbia ranked third among the 10 provinces and would place sixth among the eight OECD

9A B..C Prosperity index based on only 11 indicators (excluding investment) shows that B.C.
ranks well behind the U.S. states (Appendix Table 1a).
46

countries. Out of the 18 jurisdictions for which data are available for all 12 indicators, B.C.
ranked eighth in 2017.
In terms of the Canadian provinces, B.C. had a lower index value for the overall Index
than Newfoundland and Labrador (101.7) and Alberta (105.8).
In terms of the eight OECD countries, B.C. did better than only three countries, Canada,
New Zealand and the UK.
As noted, since no data on investment are available for the three U.S. Pacific states, aconsistent Prosperity Index comparing B.C. and the three Pacific states on the 12 indicators is
not possible. Based on 11 indicators for these states and the 12 for B.C. however, California
appears to be around 40 per cent more prosperous, Washington 30 per cent more prosperous andOregon 18 per cent more prosperous than B.C., based on the measures captured by the Index.
Data on the index value for the overall index are available for the 2013-2017 period forthe two types of jurisdictions for which values for all 12 indicators exist. During this period B.C
enjoyed the largest increase/improvement in performance among the ten provinces, and only one
OECD country did better: the United States. Out the 18 jurisdictions, B.C. performed second
best, an impressive showing.

47

Chart 17: Overall B.C. Prosperity Index, 2017 (B.C. in 2017 = 100)

New Brunswick
Prince Edward Island
Nova Scotia
Manitoba
Saskatchewan
Ontario
QuebecBritish Columbia
Newfoundland and Labrador
Alberta
United Kingdom
New Zealand
CanadaAustralia
FranceGermany
United StatesJapan
OregonWashington
California
0

20

40

60

80

100

120

140

160

Comparison of the BC Prosperity Index with other Provincial Indexes ofWell-being
Several other indexes of well-being have been developed in Canada and elsewhere. These
are the UNDP Human Development Index (HDI), the CSLS Index of Economic Well-being(IEWB) and the OECD’s How’s Life Index. For an overview of these indexes, see Sharpe(2018). This section of the report compared the results of the B.C. Prosperity Index for British
Columbia with the B.C. numbers (where available) from the other indexes.
UNDP Human Development Index
The best known international composite well-being index is the Human Development
Index (HDI) produced by the United National Development Program. The HDI consists of threesub-indexes for income (GNI per capita), health (life expectancy) and education (expected andmean years of schooling).
48

Estimates for the Canadian provinces and territories are produced on a regular basis by
the Centre for the Study of Living Standards. Estimates for the 1990-2015 period are found in
Uguccioni et al. (2017). British Columbia ranked third of the 13 jurisdictions for the overall HDI
in Canada in 2015, placing first in life expectancy, second in educational attainment, fourth in
expected schooling, and eighth in income. This is consistent with B.C.’s third place ranking outof the 10 provinces for the B.C. Prosperity Index for 2017.
OECD Better Life Initiative How’s Life Index
The second best known international composite index of well-being is likely the OECD
How’s Life Index produced by the OECD Better Lives Initiative. The index consists ofindicators in 11 areas: access to services, civic engagement, education, jobs, community,
environment, income, health, safety, housing, and life satisfaction.
Regional or sub-national estimates of the index for OECD counties are now produced by
the OECD and are available for the Canadian provinces and territories.10 In 2017, British
Columbia ranked first among the provinces and territories in education (share of the labour force
with at least secondary education) and community (perceived social support network); second inaccess to services (household broadband access) and health (life expectancy and mortalityrate);third in life satisfaction; fourth in jobs (employment and unemployment rates) and income(disposable income per capita); fifth for civic engagement (voter turnout); seventh in safety(homicide rate) and housing (number of rooms per person); and eighth in environment (averagelevel of PM2). In terms of the overall index with equal weighting of all 12 indicators, B.C.
ranked fourth. Again, this is generally consistent with the third-place ranking for the province in
the B.C. Prosperity Index.
CSLS Index of Economic Well-being
The Centre for the Study of Living Standards (CSLS) developed a composite measure of
economic well-being in the late 1990s and early 2000s (Osberg and Sharpe, 2002) and has been
updating the index on a regular basis. The original Index of Economic Well-being (IEWB) wasfor selected OECD countries. The index contains four domains (consumption, stocks of wealth,inequality and economic security) and 28 specific indicators.
The IEWB has been expanded to the Canadian provinces. Estimates for the 1990-2014
period are found in Thomas and Uguccioni (2016a). In 2014, British Columbia ranked thirdamong the provinces in the overall IEWB. Again, this is consistent with the third-place ranking
for the province in the B.C. Prosperity Index. B.C. was fourth for consumption, third for stocks
of wealth, sixth for income inequality, and seventh for economic security in the IEWB.

10

https://www.oecdregionalwellbeing.org/CA59.html.

49

Agenda for Future Work on the B.C. Prosperity Index
Many extensions of the B.C. Prosperity Index are possible. This section briefly discusses
several extensions, namely, the disaggregation of the index to socio-economic groups, subprovincial estimates, expansion of the number of indicators, and expansion of the number ofcomparator jurisdictions.
Disaggregation of the B.C. Prosperity Index by Socio-Economic Group
The B.C. Prosperity Index applies to the overall population of the province, but the gains
from economic growth and prosperity may not be shared equally by all British Columbians.
Consequently, it may be important to track economic performance and social progress byconstructing a sub-index of the B.C. Prosperity Index for different demographic and socioeconomic groups. Many of the 13 indicators that comprise the Prosperity Index apply at a
territorial level, such as air pollution, and cannot be broken down on an individual or groupbasis. But at least six of the indicators could be broken down, namely educational attainment,household income, the unemployment rate, housing affordability, life expectancy, and thepoverty rate. These indicators could be disaggregated into at least five types of groups: age,gender, level of education, immigrant/non-immigrant status, and Indigenous/non-Indigenous
status.
Development of Sub-Provincial Estimates of the B.C. Prosperity Index
Just as all groups in British Columbia may not share equally in prosperity, not all regions of
the province may fairly benefit from economic growth or improvements in well-being. Again,
sub-provincial or regional estimates of the B..C Prosperity Index may be desirable to shed lighton the uneven economic performance and social progress throughout the province. Suchdisaggregation could be based on sub-provincial breakdowns or jurisdictions such as Lower
Mainland versus rest of province, economic regions as defined for Employment Insurance
benefits, or census metropolitan areas (CMAs) and census areas (Cas). In principle, data can befound or developed at the sub-provincial level for all or almost all the 12 indicators in the B.C.
Prosperity Index, even for productivity, but such an exercise would likely be more difficult thandisaggregation by socio-economic groups because of less readily available and easily accessible
data.
Expansion of the Indicators in the B.C. Prosperity Index
The B.C. Prosperity Index only includes 12 indicators. If the Index is well received,
expanding the index by adding additional domains and indicators could be considered, such as
the incidence of low-wage employment and a measure of life satisfaction.

50

Expansion of the Number of Comparator Jurisdictions
The B.C. Prosperity Index currently includes 21 jurisdictional units from three types ofjurisdictions: 10 Canadian provinces; three U.S. states and eight OECD countries. The Index
could be expanded to include the three Canadian territories, additional U.S. states, and additional
OECD countries (up to 33).

Conclusion
In this report, the Business Council of British Columbia has constructed the B.C.
Prosperity Index to assess the province’s performance on a number of indicators related toprosperity and well-being, and then compared this performance with that of 20 other jurisdictions– nine provinces, eight OECD countries, and three U.S. states. Level comparisons are made withall jurisdictions for the year 2017, the terminal year for the Index. Growth rate comparisonsacross jurisdictions are made for the 2013-2017 period, as a number of indicators are only
available for this short period even though most indicators have longer time series.
Table 2 gives the ranking for B.C. in 2017 for all 13 indicators/sub-indicators for each of
the three types of jurisdictions (provinces, OECD countries, U.S. states), and the overall ranking
for all 21 jurisdictions for the 13 indicators/sub-indicators, the three domains (businessenvironment, economic well-being, and societal well-being), and the overall Prosperity index.
B.C. does well compared to the other provinces, ranking third overall. B.C.’s performance
relative to the eight OECD countries is not as strong relative to the provinces. B.C. would ranksixth out of eight if it were an OECD country. It is only relative to the three U.S. Pacific statesthat B.C. does poorly, ranking behind all three in the overall Prosperity Index.
For all 21 jurisdictions, B.C. ranked 11th in the Prosperity Index in 2017. It ranked 12th
for the business environment, tenth for economic well-being and seventh for societal well-being.
It did particularly well on education attainment, per capita disposable income, life expectancy
and poverty.
While B.C.’s 11th place in the level of the Prosperity Index in 2017 is average, theimprovement in its performance over the last five years has been considerably more impressive.
Table 3 gives the ranking for B.C. for its growth (or improvement) rate for the 2013-2017 period
for all 13 indicators/sub-indicators, for each of the three types of jurisdictions (provinces, OECD
countries, U.S. states), as well as the overall ranking for all 21 jurisdictions for the 13
indicators/sub-indicators, and the three domains (business environment, economic well-being,and societal well-being). B.C. does very well in improving its performance on the Prosperity
Index compared to the other types of jurisdictions, ranking first among the provinces, second
among OECD countries and third among the U.S. states.
For all 21 jurisdictions BC ranked fourth in growth/improvement over the 2013-2017
period in the Prosperity Index in 2017. It ranked tenth for improvement in the business
51

environment domain, seventh for the economic well-being domain, and first for the societal wellbeing domain.
To conclude, British Columbians can be quite proud of their economic performance, both
the recent state of the economy and the improvement recorded over the five years ending in2017. Their efforts have resulted in a prosperous province, particularly compared to the other
Canadian provinces, although less so compared to the U.S. states to the south, especially
California and Washington. B.C.’s poor performance relative to three Pacific states largely
reflects their higher levels of income and GDP per person.
One limitation of the B.C. Prosperity Index is that it does not include many indicatorsthat contribute to the broader quality of life of the population. A considerable number of these
indicators are better in Canada than the in the United States. Indeed, compared to Canada, theUnited States has a high cost and lack of universality of health care, a higher incarceration rate,
higher university tuition costs, a higher rate of gun violence and crime, and of course a moredivisive political climate.

52

Table 2: B.C.'s Ranking on the B.C. Prosperity Index, Its Domains, and Their Components, 2017

Indicator

Provincial Ranking

LabourProductivity
Non-Residential
Investment
Innovation (R&D
Expenditures asshare of nominal
GDP)
Education
Overall Business
Environment
DomainReal GDP per
CapitaPer Capita
Disposable
Household Income
Unemployment
Housing
Affordability
Overall Economic
Well-Being DomainLife Expectancy
Poverty Rate
Income Inequality
Air Pollution
Greenhouse Gas
EmissionsOverall Societal
Well-Being Domain
Overall B.C.
Prosperity Index

State Ranking

Overall Ranking

5OECD Ranking
Business Environment
7

4

14

5

7

N/A

11a

3

8

4

13

3
6

2
7

1
N/A

4
12a

4

Economic Well-Being
4

4

10

2

3

4

7

1
9

6
7

4
4

9
18

3

5

4

10

3
3
6
6
4

Societal Well-Being
4
5
3
1
5

1
1
1
3
4

6
7
8
8
11

5

3

1

7

3

6

4b

11b

Notes: a) Out of 18 jurisdictions, excluding the three U.S. states.
b) This ranking includes the three U.S. states, even though numbers for the states are not directlycomparable due to the exclusion of one variable (non-residential investment).

53

Table 3: B.C.'s Ranking for 2013-2017 Growth Rates of the B.C. Prosperity Index, Its Domains, and Their Components

Indicator

Provincial
Ranking

OECD Ranking

State Ranking

Overall Ranking

3

9LabourProductivity
Non-Residential
Investment
Innovation (R&D
Expenditures asshare of nominal
GDP)
Education
Overall Business
Environment
Domain7

Business Environment
1

5

7

N/A

11a

6

6

4

14

6
5

5
6

1
N/A

10
10a

Real GDP per
CapitaPer Capita
Disposable
Household Income
Unemployment
Housing
Affordability
Overall Economic
Well-Being Domain

1

Economic Well-Being
1

4

4

1

2

4

5

1
1

5
1

4
1

8
1

1

4

4

7

9
1
2
8
6

Societal Well-Being
8
1
1
2
8

1
1
1
1
2

16
1
2
9
14

1

1

1

1

1

2

3b

4b

Life Expectancy
Poverty Ratec
Income Inequalityc
Air Pollutionc
Greenhouse Gas
Emissionsc
Overall Societal
Well-Being Domain
Overall B.C.
Prosperity Index

Notes: a) Out of 18 jurisdictions, excluding the three U.S. states.
b) This ranking includes the three U.S. states, even though numbers for the states are not directlycomparable due to the exclusion of one variable (non-residential investment).
c) For some indicators, lowest growth ranks first. For example, the best-performing jurisdictions in terms ofgrowth in GHG emissions would have the lowest growth rate in that indicator.

54

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British Columbia Council on International Cooperation (2017) “Where Canada Stands: A
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Canadian Index of Well-being (2016) “The 2016 National Index Report: How Are Canadians
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Centre for the Study of Living Standards (2015) “Canada 2030: An Agenda for Sustainable
Development,” CSLS Research Report 2015-02, February http://www.csls.ca/reports/csls201502.pdf
Employment and Social Development Canada (2018) “Opportunity for All: Canada’s First
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