Methodological Notes – Socioeconomic Conditions

Updated: April 2012

Concepts and Definitions

Socioeconomic conditions are widely recognized to be important determinants of health. Although there are many measures, the number that can be used for international comparisons is limited. Variables such as income, education and employment are measured differently in different countries and they have different contexts. Only two measures are reported in CircHOB, dealing with the economy and education. The former is an ecologic level measure, while the latter refers to individuals.

The gross domestic product is a well-established economic indicator, and is a measure of the goods and services produced within a country or region during a period. The concept and its measurement are well described in textbooks of economics. “Domestic” refers to production occurring within the country or region, including activities of foreign-owned firms or migrant workers. GDP is to be contrasted with gross national product (GNP) which encompasses also production by a country’s citizens abroad. The GDP divided by the population produces the per capita GDP to allow for comparison across regions with different sizes of population. The GDP of the northern regions can be expressed as a percentage of their respective national GDP to indicate the relative share of the national economy. The ratio (northern per capita GDP) / (national per capita GDP) indicates if the average person in the north is better or worse off than the country’s citizens as a whole.

Different countries use different currencies, and cross-national comparisons require the conversion to some common standard. While the US dollar at market exchange rates (MER) is often used, economists construct “purchasing power parities” (PPP) to adjust for price differences, which may vary considerably among countries, and this conversion is more reflective of the true production volumes of the regions. Note that Arctic-regional PPP-factors have not been developed, and it is the PPP-factors of the national economies that are used, which could be a potential source of bias, especially if price levels are different among regions within countries.

The use of GDP as a measure of economic well-being has well-known shortcomings:

  • Non-market transactions (child rearing, homemaking, etc) are excluded;
  • Economic activities that are detrimental (eg. to the environment) are included;
  • Value of leisure and other aspects of quality of life are excluded;
  • Income distribution across the population is not measured; and
  • The sustainability of production is ignored.

For northern regions, there are additional issues:

  • A sizable proportion of the workforce in the north consists of seasonal workers from outside the region, and many firms are owned by non-residents and their profits leave the region. The regional GDP thus does not reflect the true income accruing to the residents of the region. On the other hand, a region such as Alaska, with its Alaska Permanent Fund, generates billions of dollars of investment income outside the state which is not captured by the state’s GDP;
  • Many northern regions are subsidized by the national governments, and such public sector spending are included in the regional GDP, even though it does not represent strengthening of the regional economy;
  • Subsistence activities, especially by the indigenous people in the North, may not be counted at all, or inconsistently valued;
  • Northern economies that are dependent on a few natural resources (eg. oil and gas) may be subject to substantial year to year variation due to market price fluctuations.

A full discussion and explanation of these issues can be found in the Statistics Norway report, The Economy of the North 2008.

At the individual level, education is recognized as an important determinant of health. International comparison of educational levels of individuals is complicated by the vastly different educational systems in operation in different countries. Only one education indicator is presented in CircHOB, that of tertiary education attainment, referring to the proportion of the adult population who have completed tertiary education or attained qualifications at that level. It should be noted that tertiary education is not necessarily the most important for health. Its selection is based on the fact that tertiary education is generally more easily identifiable and comparable across education systems. Disparities in tertiary education attainment are likely to be more pronounced across countries and regions than secondary education, which is likely to be uniformly high in the circumpolar countries.

Two issues, however, arise from the choice of tertiary education attainment: defining the age range and defining tertiary education. Some statistical agencies report their results on the population aged 15 and above, or 25 and above, with some restricting to only the “working age” (up to age 65), and others up to age 75. In young adulthood, many individuals are still engaged in formal schooling, and may not have completed their highest level of education. Setting the lower age limit at 25 reduces this problem. OECD produces data within the age range of 25-64. When other sources are used, where possible the same age range is adhered to as closely as possible to ensure comparability.

While university is clearly tertiary education, it is by no means clear if some vocational training at the post-secondary level should also be considered tertiary. The International Standard Classification of Education (ISCED), developed by UNESCO and last revised in 1997, is based on the duration of training, age at entry and completion, academic content, etc, and encompasses all variations and permutations of educational systems in the world. Tertiary education is classed as ISCED 5 and 6. ISCED 6 refers mainly to programs leading to the research doctorate, a credential that is more or less the same everywhere. ISCED 5 is divided into 5A and 5B, with the former more “academic” or “theoretical” and the latter more “technical” or “practical”. ISCED 5A may be difficult to distinguish from ISCED 4 – “post-secondary non-tertiary”. In order to achieve consistency, tertiary education in CircHOB is defined as ISCED 5 and 6, and published data that fit this definition as closely as possible are selected. Detailed notes on ISCED and how it applies to the educational systems of all OECD countries can be found in the OECD Handbook for Internationally Comparative Education Statistics (2004).

Data Sources and Limitations

Gross domestic product

GDP are calculated from national accounts, an exercise that is clearly beyond the competence of non-economists. Two international sources – OECD and World Bank – are used. OECD is useful in that it also reports data on regions within countries. CircHOB reports OECD data for the United States, Canada, Norway, Sweden, and Finland and their respective northern regions [from OECD.stat, available only to subscribers]. For Denmark, Iceland, Greenland and Faroe Islands, the World Bank World Development Indicators is the source, since the World Bank provides separate data for Greenland and Faroe Islands.

For Russia, the data in national currencies are obtained from tables published in the Rosstat website. The World Bank provides USD-PPP values for Russia as a whole. Since the ratio of GDP per capita between Russia and each region is the same regardless whether it is in rubles or USD-PPP, the national GDP in USD-PPP is multiplied by the ratios in rubles to obtain regional values in USD-PPP. However, Rosstat does not report GDP data for the Taymyr, Evenkia and Koryak AO, since these “federal subjects” were eliminated in 2007. GDP data for these regions from 2000-2007 can be found in the 2008 issue of the annual publication Regiony Rossii  [Table 11.1].

Tertiary education

The sources of educational attainment data include censuses, labour force surveys, and particularly in the Nordic countries, education registers. For comparison among countries, international agencies such as OECD’s annual publication Education at a Glance. OECD coverage included all the circumpolar countries, including Russia, but not regions within these countries, nor Greenland and the Faroe Islands.

United States data are available from the US Census Bureau’s annual American Community Survey. The age range is 25+. The definition of tertiary degree includes an “associate” degree or higher (bachelor’s, master’s, and doctorate).

For Canada, data from the 2001 Census, from Highlight Table 97F0024XIE2001012, are used for the 2000-04 period, and the 2006 census for the 2005-09 period, from Highlight Table 97-560-XWE2006002. Individuals who have attained tertiary education comprise those aged 25-64 with college/university degrees/diplomas/certificates and higher within the age range 25-64.

Denmark and Iceland data are available from OECD. No data source on Faroe Islands can be located from OECD, NOMESCO, or Statistics Faroe Islands. For Greenland, two health surveys conducted by the National Institute of Public Health during 1999-2001 and 2005-2009 (on Inuit only, who constitute 85-90% of the population) provided data on the proportion of survey respondents with Mellemlang videregående [3-4 yr] and Lang videregående [university] qualifications. Note that the first survey covered only the west coast whereas the second one sampled the entire country.

Norway national and regional data are from Statistics Norway’s StatBank Table 06217 [ >04 Education > 04.01 Level of education > Table 06217]. Individuals aged 25-66 are covered, and tertiary education refers to both “short” and “long” courses, the former up to 4 years in duration and the latter exceeding 4 years. This would correspond to ISCED 5 and 6. The Statistics Norway table is based on the National Education Database, whereas OECD data for Norway are derived from labour surveys.

Sweden data are from Statistics Sweden’s Statbank [ > Education and research > Population 16-74 years of age by highest level of education, age and sex] extracting those aged 25-64. However, ISCED 4 and 5 B are combined, thus including some individuals in the “post-secondary, <3 years” category. Finland data were from Statistics Finland’s StaFin interactive website, and included individuals aged 15+ with universit (yliopistokoulutus), polytechnic (ammattikorkeakoulukoulutus), and vocational institute (ammatillinen koulutus) qualifications which would correspond to ISCED 5 and 6. Note that the English but not the Finnish website provides categories based on ISCED classification. Because the lower age range, the proportion in Finland is lower than if the 25 year lower limit is used.

National and regional data were from the 2002 Census, volume 3, available as Table 3.01 (national) and 3.03 (regional).