Hungary’s prosperity index: The Legatum Institute’s findings

The first time I heard about the institute and its prosperity index was in an opinion piece by György Bolgár. I immediately went to the original source, the web site of the Legatum Institute. I found the study fascinating. Legatum defines prosperity as both material wealth and spiritual well being. So the world's most prosperous nations have both a sound economy and happy, healthy, free citizens. The Index studied the situation in 104 different countries that comprise 90% of the world's population. The Index is subdivided into nine sub-indexes: economic fundamentals (meaning a growing sound economy), entrepreneurship and innovation, democratic institutions, education, health, safety and security, governance, personal freedom, and social capital (that is, trustworthiness in relationships and strong communities).

Finland tops the list, narrowly ahead of Switzerland, Sweden, and Denmark followed by Norway, Australia, Canada, the Netherlands, the United States, and New Zealand. And now comes the surprise. In Eastern Europe in Legatum's prosperity index Hungary is twenty-seventh, ahead of Poland (29), Slovakia (34), Bulgaria (46), and Romania (48). In the region only Slovenia (20) and the Czech Republic (25) are ahead of Hungary.

What is Hungary's weakest link? It is social capital. And it is not just a bit weak. If one looks at the entire list it is one the worst with a score of 92. Just to give you some idea of how bad that is, it can be compared to Algeria, Bulgaria, Romania, Estonia, Peru, and yes, Zimbabwe that, by the way, is last on the list. (Do you remember that Hungarians' satisfaction with their own lot was comparable on another international comparison with that of the citizens of Zimbabwe?) But this category is the only one that is marked red on the Hungarian "prosperity map." Everything else is bright green with the exception of one yellow bloc meaning "average" and that is "personal freedom." Interestingly enough, "personal freedom" as defined by the researchers at Legatum is also considered "average" in Austria, Slovenia, Italy, Israel, Poland, Greece, and Slovakia, just to mention a few. In fact, Hungary with a score of 48 is doing relatively well, because Greece received a score of 65 and Slovakia 69. One may find it a source of satisfaction that Israel and Hungary are tied with an overall score of 27.

One observation of the Legatum Institute is that "history is not destiny." Highly ranked nations include those with a long history of productive economies, effective and limited government, and social capital, yet several other nations rank high that not long ago were afflicted with poverty, oppression, and unhappiness. In Europe the authors of the Prosperity Index specifically mention Croatia, Estonia, the Czech Republic, Hungary and Slovakia, countries that not so long ago were controlled by communist governments, with little wealth or freedom.

I assume Viktor Orbán would not agree with these findings. After all, according to him Hungary is like an abandoned battlefield. The country impatiently awaits the Messiah who will make from this poor second Zimbabwe a country like Finland! Well, I will be curious to see what the 2010 Prosperity Index will look like if Orbán's dream of a "national renaissance" actually materializes. 

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Öcsi
Guest

Very interesting study, indeed. Their summery of Hungary’s “Social Capital” (92 out of 104!!) is worth quoting:
“While most people do not consider friends to be highly important in their lives, a very high 92% of citizens feel they can rely on their family and friends in times of need.* However, less than a quarter of Hungarians feel they can trust others, a very low proportion by global standards. Membership in religious, arts, environmental, and sports organisations are all very low, ranking Hungary in the bottom third of all countries on all four variables. Only 20% donated to charity in the recent month and less than 10% volunteered, placing the country in the bottom 10 worldwide on this variable. Furthermore, only few Hungarians helped a stranger in the last month, ranking the country in the bottom quartile on this variable.*
* Data taken from the Gallup World Poll”
From my limited knowledge of the situation in Hungary, I think this report is fairly accurate. I think it also helps explain the sorry state of the nation’s politics. And it doesn’t bode well for the future, regardless of who forms government.

Mark
Guest
If there is anything worse than dodgy opinion polls, it is rankings of countries produced by unaccountable and politically-interested organizations produced according to self-defined criterial in order to score political points. If you look closely at the senior staff of the Legatum Institute they are a combination of people who served in the Bush White House or have associations with neo-conservative think-tanks such as the Heritage Foundation. This isn’t to say that everything here is invalid, but the information they produce should be treated with appropriate critical distance. This is especially the case when countries are ranked according to categories where the judgements are likely to be ideologically loaded – “personal freedom”, “governance” and “social capital” seem to be the major offenders in here. When I see their stageering conclusion that “the most prosperous nations in the world are not necessarily those that have only a high GDP, but are those that also have happy, healthy, and free citizens”, the first thing that comes to mind is the old Monty Python joke about the PhD. in the blindingly obvious! Even then when one looks at the raw rankings they have produced a rank order which does not differ much from… Read more »
Öcsi
Guest

Mark, your first and last paragraph seem contradictory. You say that the senior staff of the Legatum Institute have connections to neo-conservative think-tanks and then you conclude that their rankings are no different from other such rankings. While I don’t disagree with you about being cautious about such institutes, I don’t know what lesson there is for Hungary.
Can you elaborate?

Sophist
Guest
Eva, “Sure, one must be careful, but there are too many signs that “social capital” is in short supply in Hungary.” This simply doesn’t ring true: I have far better relationships here with my neighbours and colleagues than I had in the UK. The report itself remarks, “The field of social capital and its relation to wellbeing is still evolving, and therefore, the data and measurement tools necessary to evaluate social capital are still limited” (pg 35). I would like to know the split of the social capital index. Squinting at the bar chart suggests that half of figure comes from membership of arts, sports, environmental and religious organisations. This is inherently disadvantageous to post-Communist societies, where the state didn’t tolerate any autonomous institutions. Nor does it address the social capital that Hungarians derive from their extended family and alumni networks. I think the whole membership phenomena (including religious organisations in essentially secular societies) is driven by the need to compensate for the social networks fractured by high labour mobility. The domination of Anglosphere countries (including numerous ex-colonies) in this index leads me to agree with Mark’s health warning – the index doesn’t recognise the diversity either of social networks… Read more »
Mark
Guest
Öcsi: “While I don’t disagree with you about being cautious about such institutes, I don’t know what lesson there is for Hungary.” I don’t think there is one, or at least one that is clear. These sorts of rankings are pseudo-social science. Firstly, the idea that one can objectively produce a rank order of the “best” and “worst” countries is itself highly suspect, and I would ask what it really means? Secondly, the categories reflect a set of value judgements, and the interpretation of the factors that produce a score involve making a set of value judgements. These judgement are not really tied to any evidence, nor do they explain any actually observable phenomena. What we have is an institute that wants to make judgments about countries according to their criteria and give them the appearance of objectivity. That they are staffed by people of a particular political line, and funded by a company – Legatum Capital – which is an investment company, should lead us to be sceptical given the nature of the exercize. Éva: “As it is becoming obvious Mark is our “poll-skeptic.”” And with good reason. In most countries the misinterpretation and misuse of survey evidence in… Read more »
Mark
Guest
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