From Foresight, Vol. 11, No. 1
published 2004
At any given time, it is easy to learn how Kentucky compares with other states on a variety of factors. A look at a newspaper, listening to the news, or a quick Internet search is all it takes. Countless organizations, independent researchers, as well as myriad government agencies routinely rank the Commonwealth relative to other states in regard to various indicators. Some rankings profile a particular facet of the state, such as its economic or entrepreneurial performance, but such measures are inherently limited since they offer only a partial glimpse of life in the Commonwealth.
For example, data from the Federal Bureau of Investigation (FBI) show that Kentucky had the seventh lowest crime rate in the country in 2002. Equally positive, the U.S. Census Bureau reports that Kentucky’s homeownership rate ranked 13th among the states in 2002. But in that same year Kentucky ranked 43rd in the proportion of adults aged 25 and older who had attained at least a bachelor’s degree. These data indicate that Kentucky is a relatively safe place to live with abundant opportunity for homeownership, but lacks a large population of educated adults. What these data do not provide is an overall portrait of life in Kentucky. That is, given its many strengths and weaknesses, does Kentucky provide a relatively high quality of life for its citizens? And how has this status changed over time?
Here, we offer an answer to these questions based upon a newly constructed index of quality of life in Kentucky. The State of the Commonwealth Index is a single number that summarizes Kentucky’s overall quality of life relative to other states over time. Based on data for 1990 to 2001 derived from national surveys and studies of various indicators of well-being in the states, the State of the Commonwealth Index includes factors ranging from teen pregnancy, poverty, and voter participation rates to toxic releases to air, water, and land. Together, they form a data-driven index that offers a richer understanding of how we are faring now and how our status has changed relative to other states.
The State of the Commonwealth Index combines 26 long-term quality of life indicators from 1990 to 2001,(1) including measures of community attributes, education, the economy, the environment, and government (see Table 1).(2) The index uses summary statistical information about each indicator to construct a number ranging from 0 to 1000 that expresses how each state’s measure compares with that of other states. The higher the score, the better a state ranks.(3) The final index score is the average of five subindex scores based on the quality of life themes measured by the indicators. They include five subindexes: communities, education, the economy, the environment, and government. Scores range from 0 to 200 based on the equal weights given to each theme. In addition to comparing Kentucky with all the states, a second index was created comparing Kentucky with its peer states.(4) This group of states includes those demographically, geographically, and economically similar in makeup to Kentucky; 17 states are included in this second index.(5)
Table 1: The 26 Long-Term Quality-of-Life Indicators Used in the State of the Commonwealth Index
Although it is a comprehensive, data-driven index, caveats and complicating factors potentially affecting the outcome of its values include the choice of weighting scheme, the quantity and types of indicators included, and the inherent quantitative bias of the method. The framework used to construct the index was the result of 15 public forums held throughout Kentucky culminating in a statewide conference in 1994, in which over 500 people participated. From these meetings a vision statement of Kentucky’s future emerged that highlighted the five main themes used here to construct the subindexes. The weighting scheme reflects the values and priorities highlighted during these meetings.(6) In addition, while countless quality of life indicators are available, those chosen reflect these same values and ideals presented by Kentuckians in their vision of the state’s future. That said, arguably many facets define quality of life that do not easily lend themselves to quantification, inherently biasing any index of this kind toward those that can be quantified.(7) These caveats notwithstanding, the final form and methodology used here are reasonable given the objective, unbiased approach taken to reflect the values and ideals generally held by many Kentuckians.
Quality of life and well-being improved for Kentuckians as the State of the Commonwealth Index climbed six places from a rank of 46th nationally in 1990 to 40th by 2001. Table 2 shows the states ranked by their 2001 index scores, each one’s corresponding 1990 rank by index score, and the net change in rank that occurred during the time period. These data reveal that regional differences among the states did not change much during the 1990s. Those states that are “getting it right” tend to be located in the northeast and the midwest United States, whereas those states that ranked near or at the bottom all lie in the South, which has struggled to escape a legacy of poverty and undereducation. Inextricably linked, these weaknesses give rise to myriad negative, multigenerational outcomes. Furthermore, these extreme positions remained relatively static during the decade. The same top five states ranked by index score in 1990 remained there in 2001. Of the bottom five states, only Kentucky moved out of this category by 2001. Figure 1 shows the trajectory of Kentucky’s progress in both indexes over the period. Improvement began early in the period, followed by several years of losing ground, and then a major jump in both indexes in 1998. Although Kentucky has fallen slightly since 1998, it has maintained its net improvement compared to 1990.(8)
Table 2: Kentucky and the 49 States, 2001, 1990 Index Scores, and Change in Rank
Figure 1: Kentucky Ranked by Its Index Score Relative to the US and the 16 Peer States, 1990-2001
In terms of progress, Kentucky ranked among the top ten, with only seven other states climbing more places in rank than did the Commonwealth. Michigan increased the most in rank nationally, moving up 17 places, from 24th in 1990 to 7th in 2001. Utah declined the most in rank nationally, falling 12 places from 8th in 1990 to 20th in 2001. Kentucky’s net change in rank exceeded the majority of states. Approximately 36 states saw a net change in rank of five or fewer places in either the positive or negative direction.
Compared with its peers, Kentucky improved the most in rank. Table 3 shows that Kentucky moved up two places among its peer states from 12th in 1990 to 10th in 2001. This is the highest positive net change in rank for this group of states. Only Arkansas saw a comparable net change in rank, moving down two places from 11th in 1990 to 13th by 2001. The remaining states changed by only one position or not at all.
Table 3: Index Scores for Kentucky and 16 Peer States, 2001, 1990, and Change in Rank
In spite of this progress, Kentucky maintains a “below-average” status based on either comprehensive measure. Ranked 40th of the 50 states, the Commonwealth falls well short of the national average. Kentucky compares relatively better among its peer states, ranking 10th of the 17 states, but still falls short of the average for this group. While the state continues to lag behind national and peer state averages, the considerable improvement in these two index scores over the time period strongly suggests that commitments made to improving the social and economic well-being of citizens of the Commonwealth are achieving their desired result. However, they have not been sufficient to achieve parity or overcome the well-established positions of other states, which continue to make their own gains.
Kentucky improved its standing nationally and among its peer states in the majority of the 26 long-term quality of life indicators (see Table 4). The state made progress in 15 of the indicators both nationally and relative to the comparison states. Of the remaining indicators, Kentucky held steady on 3 and lost ground in 8 nationally, and 2 and 10, respectively, relative to its peer states. Most of the indicators that declined or held steady in rank measured Kentucky’s performance relative to other states in the areas of communities, the environment, and government. Kentucky declined in rank in all but one of the environmental indicators, two indicators of community attributes, and at least one of the government indicators relative to both the United States and the peer states. Among the education indicators, only one held steady over the time period nationally and declined relative to the peer states. None of the economy indicators fell in rank either nationally or relative to the 17 peer states.
Improvements in Kentucky’s historically weak performance areas of education and the economy account for the majority of the progress shown here. The net growth in Kentucky’s education and economy subindex scores from 1990 to 2001 represent approximately 70 percent of the growth in the state’s overall index score among all the states and 80 percent among the peer states. As evidence of Kentucky’s woefully inadequate educational system, ruled unconstitutional by the Kentucky Supreme Court in 1989, the Commonwealth placed 47th of the 50 states and 14th of the peer states based on a ranking of the 1990 education subindex scores (see Table 4). By 2001, the reforms that soon followed this ruling had been in effect for over a decade, along with approximately four years of reforms at the postsecondary level. Kentucky’s education subindex over the same period advanced five places in rank to 42nd in the nation and four places to 10th among the peer states in 2001. A ranking of the states based on the indicator index scores shows that Kentucky held steady or improved in each one, with the exception of high school attainment rates relative to Kentucky’s peer states. Kentucky’s National Assessment of Educational Progress (NAEP) Eighth Grade Math Exam scores improved the most relative to the remaining education indicators. The percentage of Kentucky eighth-grade students scoring at or above the basic level on the NAEP Math Exam increased from 43 percent in 1990 to 63 percent in 2001. A ranking of the states based on the NAEP index scores shows Kentucky moving from 43rd in the nation and 12th among its peers in 1990 to 34th and 9th in 2001, respectively.
Improving economic conditions during this relatively prosperous period for Kentucky helped bolster the Commonwealth’s standing nationally and among its peers. A ranking of the states based on each one’s economy subindex score places Kentucky 44th of the 50 states and 13th of the 17 peer states in 1990. By 2001, the Commonwealth climbed 7 places to 37th nationally and 4 places to 9th relative to its peer states. In a ranking of all the states and the peer states by indicator index scores in this area, Kentucky held steady at its 1990 rank or improved in every indicator in this area. The state made considerable progress toward reducing poverty and increasing access to information technology during this period. Kentucky’s poverty rate fell from 17 percent in 1990 to 13 percent in 2001. Based on rankings of state poverty index scores, this decline in poverty translated into increases in rank over the same period of 11 places nationally and 4 places among Kentucky’s peer states. Home computer access climbed 6 places nationally and 3 places among the peer states over this period, while the percentage of those accessing the Internet in the last year increased 15 and 7 places, respectively.
In terms of performance, Kentucky places relatively well among the states in the areas of communities, environment, and government compared to the areas of education and the economy, but compares less favorably in terms of progress. Table 4 shows that, in general, Kentucky has performed relatively better in each of these three areas compared with its performance in the areas of education and the economy. Nationally, Kentucky’s 2001 rank based on each of these three subindex scores exceeds its rank based on its education and economy subindex scores in 2001. This also holds true for Kentucky’s performance among its peer states, with the exception of Kentucky’s 2001 rank based on its environment subindex score. However, the state improved in rank in only 2 of these 3 areas relative to the nation and in only 1 relative to the peer states. Kentucky’s national and peer state ranks based on the communities subindex scores both increased 4 places. Kentucky increased 3 places in a ranking of the environment subindex score relative to all 50 states and held steady at 10th place in both 1990 and 2001 among its peers. In a ranking of the states based on the government subindex score, Kentucky dropped 5 places nationally and 1 place among its peers.
The State of the Commonwealth Index shows that Kentucky made great strides in improving quality of life in the state relative to the nation and its peer states between 1990 and 2001. The index is a single number that summarizes Kentucky’s performance relative to other states in 26 long-term indicators of well-being, including measures of community attributes, education, the economy, the environment, and government. Using this measure to rank the states, Kentucky falls short of the national average and just below the average quality of life found in its peer states, but it improved its position considerably over the period. Only seven other states nationally climbed more places in rank than did Kentucky, and none of its peer states improved in rank more than did the Commonwealth.
As quality of life steadily improved in Kentucky throughout this time period, a consistent corollary to this growth was the state’s commitment to improving its education system. The economic situation waxed and waned with fluctuations in the business cycle, but the state did not waver from policy initiatives taken to provide high-quality education for all Kentuckians. Vibrant communities, a beautiful environment, and honest participatory government remained characteristic of the quality of life found in the state but showed little to no growth, while dramatic growth occurred in the area of education and, in turn, overall quality of life.
Education pays—and everyone knows it. Research confirms what common sense suggests: more education is generally associated with greater earnings capacity.(9) But the higher standard of living gained by a more educated populace involves much more than the obvious economic rewards. A range of other societal benefits accrue, from better health to increased volunteerism.(10) In general, more education relates to higher incomes and lower poverty. Other benefits include increased access to and use of information technology and increased entrepreneurial activity, such as business formation and the patenting of new ideas and inventions. Beyond these economy-related outcomes are increases in voter participation rates, greater interest in the arts and other cultural activities, declines in crime, and lower reliance on public assistance programs.
These relationships help illustrate the importance of education as the foundation upon which quality of life is built. In the midst of cyclical downturns and slow-growth areas, the Commonwealth built momentum in closing the quality of life gap between itself and other states from 1990 to 2001, but much work remains before the state can claim parity with the rest of the nation and its peer states. An underlying constant across this period was Kentucky’s commitment to education, from which many benefits accrue. Whether the state maintains this momentum in coming years will depend on its level of dedication to the policies and goals that brought it this far, most importantly by providing a high quality education at all levels for all Kentuckians.
* Dr. Watts is a Policy Analyst with the Center. Return to text.
1 2001 is the last year for which we have data for all the indicators and all the states. Return to text.
2 For further information on the indicators and their sources see http://www.kltprc.net/stateofthecommonwealthappendix.htm. Return to text.
3 The indicators were standardized to facilitate comparison among them and the combination of them into one summary statistic. By transforming all outcomes to Z-scores, with the same mean (0) and standard deviation (1), each indicator was able to be compared and combined using a common yardstick. Although the use of standardized outcome measures provides a common yardstick with which to compare and combine the different indicator measures, it still is not completely satisfying for the purpose of presentation. This drawback is attributable to the fact that standardized outcomes can indicate only the direction and number of standard deviations of the difference between the given score and the mean score for the particular outcome. In contrast, the probability values associated with the standardized outcome scores represent a measure with more intuitive appeal. They range from 0 to 1, or, in this case, from 0 to 1000, with an average of 500. These values were derived directly from the Z-scores, using a cumulative standard normal distribution. For example a Z-score of 0 equals a probability of 50 percent or, here, an index score of 500. Conceptually, the result represents the percentile ranking of the Z-scores, and it indicates the extent to which the state performed well or poorly relative to the other states included in the calculation of the index.
For example, using per capita income, the first step in this method is to calculate the mean and standard deviation across all the states for a particular year. In 2001, Kentucky’s per capita income was $24,190. The mean and standard deviation across all 50 states for that year were $28,416 and $4,537, respectively. The Z-score was calculated as ($24,190-$28,416)/$4,537, which equals a value of –0.9. The probability value for this Z-score value is 0.176. This value was then multiplied by 1000 to obtain 176—Kentucky’s per capita income index score for 2001 relative to the nation. The economy subindex score was then obtained by calculating the average of this score and the six other indicators included in this quality of life theme. Upon calculation of this score, the final index score was the average of each of the five subindex scores. Return to text.
4 For further information on how these states were selected please see http://www.kltprc.net/stateofthecommonwealthappendix.htm. Return to text.
5 The peer states include Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Louisiana, Michigan, Mississippi, Missouri, North Carolina, Ohio, South Carolina, Tennessee, Virginia, and West Virginia. Including Kentucky, the total number of states used in calculating this index is 17. Return to text.
6 Choosing a weighting scheme can be problematic in that any one chosen inherently makes assumptions about the relative importance of the indicators and imposes those assumptions on the final calculation. For example, weighting the indicators equally in the index imposes the assumption that those themes with more indicators are more important than those with fewer indicators. In this case, Kentucky is again ranked 46th in 1990 based on a ranking of the national index score and increases to 39th in 2001, as opposed to 40th in the weighting scheme used here. Attempts to resolve this situation compels the researcher to make judgements about the relative importance of the indicators and themes, which then biases the final outcome. For instance, weighting education more than the other four themes and ranking the states based on this new index score leads to the same ranks attained upon ranking the states based on the education subindex score. Carrying this notion further and assuming that college attainment is the most important indicator of quality of life, would lead to an index ranking that matches the results found when ranking the states based on this indicator index score. These are just a few examples of the possible weighting schemes that could be used to calculate the final index score and what the final outcomes would be if the weights are taken to an extreme, such as one theme or indicator being dominant in the final calculations. In the end, the results based on the more impartial weighting schemes are comparable and not that different from each other. In addition, the index score would only be able to be as great as any single indicator in extreme situations. And finally, these all require a certain subjectivity and judgement of the relative importance of each indicator. The current weighting scheme does not avoid this inherent bias, but instead draws upon the input of a multitude of people throughout the state rather than a few. Return to text.
7 It is important to note that the indicators chosen here are simply that—they indicate certain notions of what constitutes a high quality of life. There are complicating factors that detract from complete and perfect measurement of the qualities represented here. For instance, state government efficiency is imperfect in that a pure interpretation of its definition indicates that one person offering services at the levels of state and local government would be the most efficient outcome. However, this measure assumes that, all other things equal, less state and local government workers serving more state residents is more efficient. That is, the quality of services offered remains the same as efficiency increases. Nevertheless, in this era of constrained resources and higher productivity in the face of technological advances, we believe this indicator reasonably captures the notion of efficiency in the services offered at the levels of state and local government. Return to text.
8 For further information on the index scores please see http://www.kltprc.net/stateofthecommonwealthappendix.htm. Return to text.
9 See for example: Gary Becker, Human Capital (1964; New York: National Bureau of Economic Analysis, 1975); Mark C. Berger and Dan Black, The Long-Run Economic Impact of Kentucky Public Institutions of Higher Education (Lexington, KY: University of Kentucky Department of Economics, 1993). Return to text.
10 See for example: Amy L. Watts, Education and the Common Good: Social Benefits of Higher Education in Kentucky, Kentucky Long-Term Policy Research Center, Frankfort, Kentucky, 2001; Richard A. Krop, The Social Returns to Increased Investment in Education: Measuring the Effect of Education on the Cost of Social Programs (Santa Monica, CA: RAND Graduate School, 1998); and Georges Vernez, Richard A. Krop, and C. Peter Rydell, Closing the Education Gap: Benefits and Costs (Santa Monica, CA: RAND 1999). Return to text.