Methodology: 50-State Competitiveness Dashboard

Methodology

Our 50-State Competitiveness Dashboard provides insights into where Massachusetts stands in the national economic landscape through indicators of state competitiveness. These indicators are aggregated into six different indices: Fiscal Stability and Public Management, Talent and Workforce, Tax Environment, Growth and Innovation Climate, Cost of Doing Business, and Quality of Life. Each consists of a weighted combination of datasets. The Council updates the competitiveness indices based on the availability of new source data and produces reports bi-annually based on a computation of the most up-to-date data available. The methodology for computing the competitiveness indices is given below.

Data Pre-Processing

Missing Values: The metrics in the MATTERS system often have data available for different years. If a value for some metric is missing for a given year, the closest previous value is used in the computation of the index ranking. If there is no previous value, the closest possible value is used.

Normalization: The values of metrics in the system vary greatly. Some are percentages that only vary by a few tenths of a point, some are numbers in the millions representing populations, or Gross State Product. The values must be normalized so that large values do not dominate. We use a standard z-transform to scale and center the data. For each metric, we subtract the mean value across all states and divide by the standard deviation. This results in each metric having a mean of zero and standard deviation roughly equal to one, making the different metrics comparable.

Inverted Trends: Typically, when looking at trends, high values are considered better than low values. However, for some metrics, the opposite is true. For instance, a low unemployment rate is a more favorable policy outcome than a high rate. Negative coefficients correct for data with inverted trends.

MATTERS Index Computation

Each index is computed by combining a set of datasets (or metrics) {${m_1, m_2 …m_n}$} as a weighted sum. The coefficient ${c_{i}}$ for each dataset determines its weighting in the sum. The general formula for each index is:

methodology competitiveness dashboard

The metrics used and their weights are given in the tables below.

Fiscal Stability and Public Management

Metric Weight
Fiscal Balance 30%
State Reserve Fund Level 20%
State Debt Level 20%
Medicaid as a Share of States’ State-Funded Budgets 10%
Unfunded Pension Liability 20%
Talent and Workforce

Metric Weight
Science and Engineering Degrees as % of Higher Education Degrees Conferred 20%
Technology Employment as % of Total Employment 25%
Bachelor’s Degree Holders in Workforce 20%
Relocation of College-Educated Adults 15%
Job Openings and Labor Turnover Survey (JOLTS) 20%
Tax Environment

Metric Weight
State and Local Tax Burden Per Capita in $ 10%
Top State Corporate Income Tax Rate 40%
State Personal Income Tax Rate 30%
Property Taxes as a Share of Housing Value 20%
Growth and Innovation Climate

Metric Weight
Annual Gross State Product Growth Rate 20%
National Institutes of Health (NIH) Awards by State 20%
Patents Awarded per 1,000 Individuals in Science and Engineering Occupations 20%
Venture Capital Invested – Dollar Total and per Deal 30%
Rate of New Employer Business Actualization 10%
Cost of Doing Business

Metric Weight
Average Family Health Insurance Premium 25%
Median Earnings 50%
Unemployment Insurance Premium per Employee 10%
Retail Price of Electricity 15%

Quality of Life

Metric Weight
Education Quality 30%
Housing Affordability 45%
Average Commute Time 10%
Healthcare Quality 15%
Please note that any tax-related information, data points, or metrics reflect the tax policy that is generally applicable to the broadest set of taxpayers. In many instances and jurisdictions, various and differing tax regimes may be applicable. Similarly, tax-related information contained within MATTERS is not intended to be tax advice. Neither MATTERS nor the Massachusetts High Technology Council is a tax advice expert offering tax advice. Neither MATTERS nor the Massachusetts High Technology Council makes any representations, warranties, or assurances as to the accuracy, currency, or completeness of the content in MATTERS or any sites linked to this site.