An envelopment-based approach to measuring regional social progress

Abstract

Today, more than ever, it is becoming evident that Gross Domestic Product (GDP) alone is not sufficient in guiding national development strategies. In this sense, measuring the social progress of a country can provide an additional lens on national performance, which would eventually help policymakers to not only gain an advanced understanding of the ways that would unleash greater long-term economic success, but also be able to propose strategies that would create the conditions for all individuals in a society to reach their full potential, enhancing and sustaining the quality of their lives. In this paper, we propose a method to measure social progress at the sub-national level, with an application to the Peruvian regions. As such, this paper builds a unified envelopment-based model for integrating a two-stage process of the index generation. We compare and contrast the radial and non-radial envelopment approaches; it is evident from the model that the non-radial approach provides better insights when compared to the radial approach.