Utilizing the American Dream Composite Index To Identify State Level Performance Gaps

The American Dream Composite Index is a measure of the degree to which people living in the United States are realizing the American Dream. The Index “gauges our nation’s well-being as a function of the multifaceted American Dream.” It is a statistically validated measure produced by a team of professors at the Xavier University in Cincinnati, Ohio.

Monthly, roughly 1,000 people respond to a national survey of 139 statements that are related to the American Dream. These data are reported out as 35 ADCI dimensions, 5 sub-indexes and a singular composite score.

Currently, the ADCI is available on a National and multi-state Regional basis. The data set can also be used to generate indexes on a few states. However, the team at Xavier University is exploring ways to collect sufficient data to make the ADCI available for all 50 states and for major MSAs. Once available at that level, the ADCI becomes a powerful tool for guiding strategic planning choices in economic development.

To illustrate the value of the ADCI in state (or MSA) level strategic planning, I asked the team at Xavier to provide me with national data and data for one state. The state I received data for was Pennsylvania.

ANALYTIC PROCESS

One of the important lessons I learned in my career is that having data is not the same as making a decision. Data is most appropriately used as a guide your decision-making. The reason for analyzing data is help minimize the risk of your making a bad decision.

With that in mind, I made some relatively simple assumptions in my analysis.

  1. If the state score on a dimension is +/- 5 percent, then it is close enough to parity to not make a big deal about the difference.
  2. If the state score on a dimension is > +/- 5 percent then it warrants attention and strategies to either exploit the performance advantage or minimize the disadvantage.

Admittedly, you could try and get more sophisticated in your approach. But, when you consider that any plan with more than 6 important strategies is a major challenge to resource and execute with excellence, I think my simple approach ends up being imminently practical. At a minimum, I believe it will get you within the ballpark of the 80:20 solution.

To transform the data for this analysis, I looked at the state score as a percent of the national score. To better visualize the data I used the following color scheme.

Equal to or greater than 105 is colored GREEN (performance advantage)

Between 95 and less than 105 is colored BLUE (performance parity)

Greater than 90 and less than 95 is colored light RED (worth a discussion)

Equal to or less than 90 is colored RED (performance deficiency)

RESULTS:

INDICATED ACTIONS:

Based on these data, economic development professionals and elected officials in Pennsylvania should consider doing the following.

  • Create effective strategies that will improves scores on RED dimensions as they are the biggest barriers Pennsylvanians are facing in achieving the American Dream to the same degree as national average. Looking at the mix of dimensions, the leadership discussions should be very interesting. And, while increased job opportunities will be an important enabler, alone a strategy to create new jobs will likely not be sufficient to close Pennsylvania’s performance gap.
  • Discuss ways to strengthen the strategies by making progress on improving some of the light RED colored dimensions. In an ideal world, both the RED and light RED dimensions would be addressed with strategies. But, simply developing strategies for dealing with the RED dimensions can be an overwhelming challenge. That is why you need to determine if addressing any of the light RED dimensions can be a sub-strategy for addressing the RED dimensions. For example, providing greater access to education will likely help close the gap on the dimension of financial security. Determining these logical connections is some of the ”art” of the strategic planning process.
  • Create strategies to extend the gap for GREEN colored dimensions. In Pennsylvania’s case, the realization of political freedom is higher than the national average. Economic development professionals and elected officials need to better understand why (particularly since civic involvement is a RED colored dimension), and then have a strategy to enable political freedom to an even greater degree.

DISCUSSION

I appreciate that the desire is for specific strategies to address deficient dimensions. But, identifying those strategies requires insights that come from a close understanding of what is happening in the state. Economic development professionals, elected officials, academicians in local Universities and Colleges, and local business leaders are in a position to bring those insights forward. Collaboratively developing a strategic plan based on those insights is the key to successfully addressing those deficiencies.

I am excited about the potential of the ADCI to fundamentally change the dialogue in economic development. It is no longer enough to be dogmatically focused on job creation. You need to shift focus to helping citizens better realizing the American Dream. If citizens in your state (or MSA) are realizing the American Dream to a greater degree than other states (or MSAs) then your location will be a preferred place to live and work.

I expect that as the ADCI becomes better understood as a performance measure in economic development, CEOs and site selectors will include it as one of the factors to exclude locations from inclusion on the short list for due diligence. Since (according to the DCI data) 76% of the time that short list is developed without a company ever talking to you, working on improving your location’s ADCI is going to quickly become a mission imperative.

To help illustrate how to think about closing the gaps identified in analyzing the ADCI dimensions, put yourself in the shoes of the economic development professional responsible for the Pennsylvania brand. What are some of the strategies you might consider to address the 5 RED colored dimensions? Please leave a comment with your thoughts.

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3 Comments so far

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  2. Don Holbrook

    October 15, 2012

    Great idea. On a much broader scale this is applicable to our nation. Our country which performs well on economic performance is pitiful in quality of life outcomes. Our divorce rate is twice that of all other nations and our life expectancy is 3-4 years less than the majority of G20 nations. This is why I believe this index could be very useful at the national level.

  3. Ed Burghard

    October 15, 2012

    @Don – I totally agree with using the ADCI as a national performance measure of the authenticity of Brand America’s promise. But, I also believe the way to fundamentally change our Nation’s performance is bottom-up. As states and major MSAs start making strategic decisions that will improve the ability of people living in their communities to achieve the American Dream, then in aggregate our Nation’s performance will improve. Right now, the Index is not available for all states and/or MSAs. The Xavier University Team is assessing what it will take to generate enough respondents to their survey so it can be presented at that level. Once that hurdle has been overcome, we will be able to compare state-to-state and MSA-to-MSA performance. Creating competition will incentivize action to improve.

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