Selecting the indicators
The indicators, drawn from national available data sets, were proposed by our Place Analytics researchers and refined following discussions with the Vibrant Economy Commission, Grant Thornton UK people and feedback from the general public.
In some cases proxies have been created. For example, there is no measure for entrepreneurialism, so we've included 'business formation rates' and likewise for innovation so we have included 'patents granted' as the nearest closest measure.
In a few cases we've used proprietary tools and algorithms to combine data sets to provide a proxy. An example would be our ‘affordability score’, which is based on a ratio of annual house prices to resident earnings.
There are things that we would like to measure, but can't, because either the data sets are not collected (for example local volunteering levels), or they're not collected consistently across all local authorities for example community engagement.
Normalising the data
Once selected, each indicator value was normalised to adjust the values measured on different scales to a notionally common scale and indicators that would have a negative impact on an area – such as the unemployment rate, mortality rate, or air pollution – were given an inverse score.
As in the usual construction of index building, a benchmarking principle was used. Each score was transformed to benchmark itself against a national average of 100 (for any indicator) and standard deviation of five.
A mean score for each basket was created.
Calculating the Vibrant Economy Index
The Vibrant Economy Index is calculated as the arithmetic average of all six scaled basket scores
Our ambition is to create a ‘gold standard’ measurement for the UK economy which benefits all parts of society. As part of this we will be developing the index to include Scotland and Wales. We will also be seeking contributions from individuals, academics, business, the third sector and public sector.
If you have comments, please let us know.