In moving to “GDP and beyond”, to cover both wealth and wellbeing and not just one or the other, the Prosperity Index faces the challenge of finding a meaningful measure of national success. We endeavour to create an Index that is methodologically sound. This is something that the Legatum Institute has strived to achieve with academic and analytical rigour over the past decade.
For the 2016 issue, the Prosperity Index was refreshed following a two-year methodological review, with the input of academic and policy expert advisors. The objective of the review was to get closer to a measure of prosperity that is transparent and policy-relevant, constructed by combining established theoretical and empirical research on the determinants of wealth and wellbeing. The Index captures the breadth of prosperity across nine pillars of prosperity using 104 indicators. We ensured that all indicators displayed a statistically significant and meaningful relationship with at least wealth or wellbeing. The 2016 edition of the Prosperity Index™ covered more countries and more variables, added a new pillar on the Natural Environment and reflected new sources of data.