Economic Development Ratings and Rankings

Do place ratings and rankings matter in economic development? Do they accurately reflect local business and economic climates? The answer is “it all depends!” Read the recent IEDC article on this topic.

Which state has the best business climate? What is America’s most “livable” city? Economic developers see a lot of rankings, but how much credence should we pay to ranked lists, many of which contain ill-defined and seemingly arbitrary metrics? How do you distinguish the real analysis from the click bait?

CityLab offers six things to keep in mind (ranked, of course) when navigating place rankings.

6. Many rankings sound similar but actually measure totally different things.

5. Not all places make the cut (if you don’t see your city, there’s a chance it wasn’t evaluated).

4. Some rankings measure reputation – not reality.

3. Some data are hard to find, which can lead to oversimplifications and skewed results.

2. Some data are imprecise or are actually a combination of secondary data sets.

1. They might be trying to sell you something.

Some rankings are more rigorous than others. Location consultant Dean Barber recommends the Tax Foundation’s State Business Tax Climate Index and CNBC’s Top States for Business scorecard (Barber Biz). Barber’s choices align with CityLab’s #1 point, as these indices lack advertising.

Watch out for maps too. “A good mapmaker should correctly and succinctly explain what their map actually shows, rather than making grand claims,” writes cartographer Andrew Wiseman. Beyond grandiose titles attributed to elementary data, Wiseman offers several additional cautions regarding maps (CityLab):

  • Numerous variables contribute to complex indicators such as health, employment, and income, so reducing a location to a simple score is often an oversimplification.
  • The increments used in data groups on choropleth maps can be manipulated to hide or emphasize certain variables.
  • Choropleth maps (especially for counties) don’t communicate important differences between various locations, i.e. population, geography, etc.
  • Heat maps are sometimes glorified population density maps (a.k.a. correlation but no causation between location and variable being mapped).

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