“I feel so much better about my kids’ chances in life. I’m better able to provide what they need to thrive” says Erica, a single mother who lives in Boston with her two sons. Nick, grade 10, loves art and Alex, grade 7, plays every sport from baseball to hockey to tennis.

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The Development Report Card (DRC) framework stems from research about the dynamics of development and economic growth in today's economy. The framework and measures were reviewed by technical advisors including economic experts and representatives from business, labor, government, and community development organizations. CFED also draws upon its own hands-on experience in technical assistance and strategic policy design.

To present a revealing portrait of each state economy and to make it possible to see the "big picture," CFED has developed 67 measures organized into a three-index framework: Performance, Business Vitality, and Development Capacity.

Graded Indexes

The DRC grades all states in three indexes—Performance, Business Vitality, and Development Capacity—that measure different aspects of economic health. Each index is composed of two or more subindexes, also graded, that provide a more detailed understanding of a state's economy. Subindexes are made up of anywhere from four to 10 measures for a total of 67 measures.

The relationship between these three indexes is dynamic: public policies affect the levels and priorities of investments in capacity; economic resource capacity inevitably affects the vitality of businesses; and the vitality of businesses determines, in large measure, overall economic performance.

Trend Indicators

Starting in 1999, the DRC added graphs tracking the grades of each of the three indexes over a five-year period. The response was positive and significant. In 2004, the report card added even more depth and historical perspective by providing five-year snapshots of a number of individual measures. Of the existing 67 measures which indicate relative progress between the states, 15 have been carefully selected to assess how the states measure up to their own past performance. These 15 trend indicators gauge the direction and magnitude of the states' economic development efforts in the context of their own political and economic environment. In addition to measuring the absolute or percent change over a five-year period, the trend indicators track change from year to year.

How Grades Are Calculated

• Raw data are collected for the 67 measures. 
• Each state is individually ranked in every measure based upon the raw data obtained. The best score is "1", the worst score is "50." 
• To calculate subindex scores, the relevant measure rankings for each state are averaged. Subindex scores are ranked from "1" to "50"-best to worst. 
• To calculate index scores, the relevant subindex rankings for each state are added together. Index scores are ranked from "1" to "50"-best to worst. 
• States that rank from 1-10 earn As. States that rank from 11-20 earn Bs. States that rank from 21-35 earn Cs. States that rank from 36-45 earn Ds. And states that rank from 46-50 earn Fs. 
• When a tie occurs, each state receives the same rank and the next best performing state is ranked as if the tie had not occurred. For example, if two states have the best score, each receives a "1" ranking and the next state is ranked "3."

The DRC weighs all measures equally in the calculation of each individual subindex. Similarly, subindexes are weighted equally in the compilation of each of the three indexes. However, it is important to note that because each subindex is composed of a different number of measures, individual measures do not affect major indexes equally.

Cautions and Caveats

No Grade Point Average

Although a single summary grade would help capture the public imagination, it would also unduly aggregate the very complex process of development and offer little insight into the strengths and weaknesses of a state's economy.

The Quality of Data

The measures available to diagnose the health of state economies vary widely in quality and precision. Since the DRC is driven by what needs to be known, not just what is readily known, it sometimes utilizes proxy measures--indirect ways of getting answers to important questions-because no one has asked or collected data on the measures before.

In a few cases, because databases are discontinued, interrupted, or updated irregularly, sources may have changed over time or data may have been repeated from the previous year in order to maintain the highest data quality. In fact, the 2007 DRC has repeated three measures and renamed four.  Repeated measures use the same data from the 2006 DRC and renamed measures use new or different data. To learn more about the changes, go to the Changes from 2006 section of the website. To learn more about the details of any specific measure, go to the Measures section of the website.

The Timeliness of Data

Data provide a snapshot of the recent past, so some changes may have occurred between data collection and publication of the DRC. The timeliness of each measure may also vary depending on how it was collected. Economists call these "lags" in the data. Since the DRC is based on, and thus limited by, available collected measures, changes in economies that are dramatic by anecdote may appear slight in the DRC.

The DRC should be a starting point to examine and debate the relative strengths and weaknesses of any given state's economy.