Milken and other rankings of the states often obscure more than they inform

Recently the Milken Institute released their new 2010 Science and Technology Index (http://www.milkeninstitute.org/tech/). Since the mid-2000s when the federal Office of Science and Technology Policy stopped producing its well-regarded report ranking the states on their place in the New Economy, both Milken and the Information Technology and Innovation Foundation (ITIF) (http://www.itif.org/publications/2010-state-new-economy-index ), has released semi-annual rankings.

Rankings such as these reports are developed by compiling data for each state on a set of indicators and assigning scores to the relative rankings. These rankings are then converted into an index on an absolute scale. Popularly known rankings are the Business Week rankings of colleges and universities, and lists such as the Fortune 500, and Inc. 500, although these only use one indicator – revenues and growth in revenues, respectively.

Milken, like some of these others, does not reveal their methodology, and in fact, they are relatively vague about their data sources, especially compared to ITIF. This makes fact checking quite difficult, and analysis of the results from a state’s point of view quite challenging.

Both Milken and ITIF have changed their methodologies over the years, specifically including different indicators from one report to the next. This makes year to year comparisons extremely difficult, a point often ignored by local newspapers who are quick to point out that their state either gained or dropped in the rankings.

Also, the data sources are not as reliable as could be. An example is the Milken rankings for Maine on risk taking and entrepreneurialism. The report explicitly states that Maine’s ranking dropped because of a drop in the number of incubators, a statistic they attribute to the National Business Incubation Association (NBIA). Interestingly, there are exactly the same numbers of functioning incubators in Maine today as there were two years ago when the last report was written. And NBIA doesn’t track the number of incubators in the country, merely the number of members of their association.

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