Measuring State Effectiveness: an ILC-UK index

Jul 1, 2016 | REPORTS

This technical report presents a new index for measuring State Effectiveness, and comparative performance analysis of countries across Europe.

About this report

  • The golden age of the welfare state is over. A big demographic shift to older societies and the growing pressure on state budgets are threatening its very existence in many European countries.
  • To avoid its demise, we are faced with a huge challenge: we need to make the welfare state more effective.
  • To illustrate how the welfare state can be made more effective, this report analyses the last 10 years of European welfare provision, ranks countries according to their performance on a set of outcomes and identifies a set of ‘welfare strategies’ adopted to pursue those  outcomes. By understanding which ‘welfare strategies’ are conducive to better outcomes, the report provides timely policy suggestions.

How do we make the state more effective?

  • To assess how successful states are or have been in the pursuit of their goals, we need to translate both welfare provision and goals into measureable quantities. In order to achieve this, we took the following steps:
  • We built a series of indices loosely based on the main features envisaged in the Beveridge report – Poverty and Social Exclusion, Health, Education, and Housing, as well as our own measure of Intergenerational fairness. We then combine all individual indices and attain  a weighted measure of State Effectiveness.
  • We derive the welfare strategies by combining a series of ‘inputs’ or single policy measures. To be noted that welfare strategies do not define states as ideal types, á la Esping-Andersen, or as ‘either/or’ categories; they are constructed on a continuum, but involve more than just different levels of spending, so reach beyond the simple classification of ‘institutional’ vs. ‘residual’ welfare states.
  • We carry out a multivariate regression analysis to investigate the association between welfare strategies and outcomes, and assess which welfare strategies are typical in countries with higher State Effectiveness, and what relationship they have with each individual outcome.
  • Clearly, there are many other elements that influence countries’ ability to attain given outcomes other than the welfare strategies identified in this report. Each country has a different history, and different socio-economic structures; however, our analysis provides a good starting point and a useful framework for further discussion.

The UK

Measuring State Effectiveness’ found that:

  • With approximately 15 million people classified by Eurostat as at ‘risk of poverty or social exclusion (AROPE)’, the UK is ranked 15th of 23 European countries on the ILC-UK’s Poverty and Social Exclusion Index.
  • The UK is ranked 14th on the ILC-UK’s Housing Quality Index, mainly due to its relatively high levels of housing cost overburden among the young and the working age population.
  • In terms of overall State Effectiveness, the UK is average: 11th out of 23 European countries

Given that the UK is ranked 15th for poverty and social exclusion; 14th for housing quality; 9th for health of the population; 9th for access to education; and 5th for intergenerational fairness, the UK is ultimately ranked a distinctly average 11th overall for state effectiveness ‘Measuring State Effectiveness’ urges the UK to learn from the welfare strategies of higher ranked countries, such as focusing on social protection for families, higher participation of older women in the labour force, and investing in substantial health expenditure.

It warns that ‘silver welfare’, the strategy of focusing spending on social protection for old age is the only strategy consistently associated with bad outcomes.

Dr Cesira Urzì Brancati, Research Fellow, ILC-UK said:

“Given that the UK is currently the 5th largest economy in the world, we might expect it to rank higher than 15th in Europe for social protection spending, and expect it to allocate spending more evenly across the lifecycle.

As the UK’s population is ageing rapidly, future governments need a coherent strategy to deliver a welfare state which guarantees the best possible provision for the largest number of people across the UK.

This strategy cannot be based on what is politically expedient; instead, future governments must base these judgements on evidence. Looking at approaches to social security, health, housing and education across Europe to identify successful strategies is a good place to start, particularly in times of such uncertainty.”


Author: Cesira Urzi Brancati