BY VICKI HYMAN
Submitted by MasterCard Center for Inclusive Growth
GDP is, at once, a broad and narrow lens. It is a powerful indicator of the strength of the economy at large, but offers little insight into the day-to-day conditions of the tens of thousands of communities that power it.
“There is a sense of places being left behind,” says Arturo Franco, a development economist and senior vice president at the Mastercard Center for Inclusive Growth. In 2018, the Center developed a data tool called the Inclusive Growth Score to help local leaders in the U.S. measure those conditions and make smarter decisions to ensure equitable distribution of resources and opportunity, boosting the potential for all citizens to reach their economic potential.
The Inclusive Growth Score is now available for all census tracts in the U.S. and has expanded to the U.K. A finalist for Fast Company’s World Changing Ideas award, the score blends open-source data with proprietary insights based on Mastercard’s aggregated and anonymized transaction data.
Now a new report from the Center that measured changes in the scores in the U.S. between 2017 and 2022 found that lower-income areas are seeing more inclusive growth than higher-income areas. It suggests those areas are more focused on measures leading to shared prosperity, Franco says, and it also challenges the notion that big cities are faring better in terms of economic and social health — levels of urbanization had no clear relationship to inclusive growth.
The Mastercard Newsroom spoke to Franco to learn how the Inclusive Growth Score has evolved, how the new report can help leaders better understand the factors that drive equity and what’s next.
What propelled the Center for Inclusive Growth to develop the tool initially?
Franco: The Center has always thought of place as one of the ways in which we can approach economic inclusion. When Opportunity Zones were created in 2017, we were really interested in understanding how our data could help tell the story of which underserved places needed the most investment. Literally we had a room in our New York City Tech Hub with a big map of the U.S. with our aggregated and anonymized data, and we started questioning how much we could say with spending data about economic development. That led to the need to contextualize spending in a much bigger conversation about what a thriving neighborhood looks like.
What do you miss when you just look at spending data?
Franco: When we look at spending even at a very granular level, we are averaging the richest and the poorest households that live in that place. What we want to do is to also show how well or badly resources, quality jobs, capital for small businesses, and economic opportunity are distributed in that place. And so we decided to include a whole set of metrics meant to give color to the differences that averages can mask.
To measure inclusion, we weigh indicators such as early education enrollment, health coverage and affordable housing, and to measure growth, we look at economic development conditions like small business loans, business openings and consumer spending pattern.
How has thinking about inclusive growth evolved since the score was first developed?
Franco: Between the time when we started doing this work, in 2018, and today, two things have happened. One is that the pandemic really showed the bare bones of our economy, and where the places that need the most support are. And two, there were the powerful conversations we had around racial equity following the murder of George Floyd. It added a new objective to public policy. It used to be about growth, and now it’s really about growth with equity. It used to be about productivity. Now it’s really about the quality of jobs, inclusion and opportunity. We know that’s happening because we see all of these new citywide equity plans coming out. We see these new positions of chief equity officer, which didn’t exist in 2018. So these kinds of tools that we have been investing in since 2018 have finally found their purpose.
What are some tangible ways that communities have been using the Inclusive Growth Score?
Franco: We’ve seen cities and local communities use the score for diagnosing their challenges. We’ve seen cities use it to benchmark other census tracts that are similar to theirs that have seen inclusive growth and look at those for best practices. During the pandemic, we saw cities using it to target programs, and we’ve seen it used for other kinds of public investment. And we’re starting to see it as a measure of progress.
In downtown Erie, Pennsylvania, it’s been used to show the economic potential of a place that hadn’t seen any investment in decades – driving new funds into the poorest zip code in the country. We’ve also seen it used to address concerns by residents of rapidly gentrifying areas. We got an email from someone from California asking to help him interpret some of the metrics, because he was literally about to go to city hall to say, “There is this thing happening to my community and I’m afraid we’re going to be displaced.”
The report that’s coming out this week is a first attempt to use the score to look back at six years of data and actually ask ourselves, "Is the U.S. growing inclusively or not?"
What’s next for the Inclusive Growth Score? Where do you take it from here?
Franco: After a very successful launch in the U.K. in 2021, the Inclusive Growth Score will be coming to Australia next, where we are also adding a climate change lens, because a lot of places there are prone to climate-related natural disasters. Some of Mastercard’s consulting practices doing work on the fringes of financial services, including working with NGOs, are finding the Inclusive Growth Score useful in their own projects. So it’s becoming not just a Center tool but a Mastercard tool.
The data is available, but one challenge is helping local leaders better understand how to use these new tools. New equity objectives require new management skills, and that part is hard to scale. We recently partnered with the Centre for Public Impact to launch Data for Equity, a 10-week program that brought together equity, technology and data officers from seven cities to teach them how to harness these data tools to propel economic inclusion. We can train seven equity officers, but now we need to train 700 — or 7,000.
We want to make sure we are bringing this tool to as many places as we can. We’re talking to community organizations, economic development agencies and others that are doing work on the ground to ask what is useful to them, what kind of data they need, and how do they use it to achieve their objectives. We have data, and we can make observations with this data, but we need local communities to help us bring that data to life.
About the Mastercard Center for Inclusive Growth
The Mastercard Center for Inclusive Growth advances equitable and sustainable economic growth and financial inclusion around the world. The Center leverages Mastercard’s core assets and competencies, including data insights, expertise, and technology, while administering the philanthropic Mastercard Impact Fund, to produce independent research, scale global programs and empower a community of thinkers, leaders and doers on the front lines of inclusive growth. For more information and to receive its latest insights, follow the Center on LinkedIn and subscribe to its newsletter.
More from MasterCard Center for Inclusive Growth