Yachts are displayed at Port Hercules in Monaco on September 24, 2015.VALERY HACHE/AFP / Getty Images
One of my favourite time-wasters is an app put out by The Economist magazine called World in Figures. At the touch of your smartphone, detailed facts and statistics about every country are available, including a special button that ranks countries on everything from beer consumption to Nobel Prize winners.
Humans can't resist ranking things. Athletes compete for points, politicians jockey for poll results, and pop stars scramble for followers on Instagram – and whoever has the most points is considered to be "in the lead."
And no one loves ranking things more than Canadian economists. We compare our provinces, our regions and our cities to see how we stack up against the others. We also love checking where Canada places among our peer countries. Here's where the app comes in handy.
Generally we do quite well in most global lists, but an increasing number of recent reports has led us to worry. For example, the Global Innovation Index shows that Canada has dropped from 11th to 16th spot over the last two years. That's raised some alarm bells, especially by opposition politicians who use it to claim that current policies are failing us.
While global rankings are fun, they shouldn't be the basis for serious economic policy debate, nor should they be the cause of unnecessary worry – or complacency.
First of all, rankings can shift simply by the inclusion of new countries on the list. This is why Canada has dropped in the global rankings in student educational achievement. Adding China (and specifically the city of Shanghai) to the list a few years ago pushed Canada down the ladder even though nothing materially had changed in our system or in our student outcomes.
Secondly, there is often little difference in the absolute index score among several countries, but comparative rankings don't reflect that. As mentioned, Canada ranks a disappointing 16th in global innovation with an index score of 0.89 out of 1.00. But eight other countries – everyone from Australia to Luxembourg – are lumped within a narrow range of 0.05. That means if even one Canadian company was a wee bit more innovative, we could jump from 16th to eighth place overnight. Yet that doesn't mean we've doubled our commitment to innovation.
Also, some rankings are comparing apples and oranges. The tiny principality of Monaco ranks first in life expectancy with the average person living 89.6 years. But is this really a fair comparison? If you live in Monaco, you're rich, you can jet off to Switzerland for cancer treatment, and you've got no ice on which to fall and break your neck. With those advantages, you'd better live nine decades!
Another problem arises when you finally make it to top spot. Can Norway really claim there is nothing more that could possibly be done to improve its democratic system? It ranks first in the world for democracy. That's a laudable achievement – but it could also lead to complacency if you think there are no improvements to be made.
Finally, rankings are a dangerous illusion if we do better only if other countries do worse. For example, if a horrible crime wave or natural disaster hit a beautiful city like Melbourne or Zurich, it could knock them down in the ranking of livable cities. Canadian cities would move up. But moving higher in a ranking simply because of someone else's misfortune is not an indication that you're making improvements.
There's no denying it's interesting and fun to see how we stack up. Media love it because it's an easy story to report that Canada has slid up or down in the rankings. But the only truly valuable comparison – at least from a policy perspective – is how we stack up against our own score in the previous year. If our index score in human development, innovation or education is falling compared with our own score in the previous year, that's a problem worth examining.
If Canadians insist on obsessing over our global ranking, the best strategy is to ask those pesky Scandinavians to unite. If Sweden, Norway, Denmark, Finland and Iceland were to somehow become one country, Canada instantly moves up four spots in every world ranking. Talk about achievement.
Todd Hirsch is the Calgary-based chief economist of ATB Financial, and author of The Boiling Frog Dilemma: Saving Canada from Economic Decline