Are State-Ranking Indicators Correlated with State Economic Performance?

Abstract

A variety of rankings appear regularly in the popular press.  Such rankings purport to indicate livability, economic well-being, crime propensity, obesity, and business climate, to name a few.  An investigation was conducted to assess whether state-ranking indicators developed by Forbes would be correlated with overall economic performance. We find that labor and quality of life have relatively high correlation with per capita gross state product; that business costs, the economic climate, and quality of life are well correlated with the unemployment rate; and the negative impact of high business costs on the growth rate of civilian employment is relatively high. The correlation coefficient between business costs and per capita gross state product has an unexpected sign. Growth prospects exhibit little correlation with state overall economic performance. The relatively low correlation coefficient between overall ranking and per capita gross state product or the growth rate of civilian employment suggests that it is not a good predictor for state workforce productivity or employment growth.