Rankings Demystified
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Transcript of Rankings Demystified
Rankings Demystified
With Forbes’ Kurt Badenhausen & Morgan Brennan
Moderator: Steve Duncan, Development Counsellors International (DCI)
#rankingsdemyst
Popular Rankings
Best Places for Business & Careers
Best States for Business
Best Places to Retire
Best Places to Live
Best States for Business
Best States for Business
Best Cities, States & Places
#rankingsdemyst
Our Guests TodayKurt BadenhausenForbes@kbadenhausen
• Senior Editor• 15 Years at Forbes• Sports Business• Author of “Best Places for
Business & Careers” & “Best States for Business”
Morgan BrennanForbes@MorganLBrennan
• Real Estate Reporter• 4 Years at Forbes• Fox News Contributor• Author of “America’s
Coolest Cities” & “America’s Fastest Growing Cities”
Moderator ‐ Steve Duncan, DCI, @sdunc33• Account Director• 9 Years at DCI• Rankings & PR Specialist
#rankingsdemyst
#rankingsdemyst
Best Places for Business & Careers
• Started 1999 in conjunction with the Milken Institute
• Introduced new methodology in 2003• Rank 200 largest MSAs and divisions by population
• Methodology looks at job/income/economic growth, costs, colleges, crime, educational attainment, migration and culture/recreation
• Sources: Moody’s, US Census, Bert Sperling
#rankingsdemyst
Best Places Methodology
• Moody’s Business and Living Cost Indexes• 1‐year, 5‐year, 3‐year projected job growth• 5‐year income growth• 3‐year projected economic growth• 5‐year net migration per capita• Crime & culture/recreation from Sperling’s• 4‐year college attainment• Highly ranked 4‐year colleges in area based on Forbes college rankings
Forbes Best Metro Areas for BusinessBusiness Job Projected Proj. gross Net College
costs growth job growth metro prod. migration attainment PopulationRank Metro area rank rank rank rank rank rank (000s)
1 Provo, UT 33 30 24 14 54 28 5432 Raleigh, NC 29 15 10 25 2 13 1,1693 Fort Collins, CO 66 23 16 30 24 6 3064 Des Moines, IA 37 34 46 91 43 54 5815 Denver, CO 130 45 22 62 36 18 2,603
6 Ogden, UT 27 39 62 27 53 73 5587 Lincoln, NE 9 28 63 52 101 39 3078 Dallas, TX 160 18 12 5 44 43 4,3579 Austin, TX 165 3 4 1 3 16 1,789
10 Nashville, TN 32 41 52 63 20 79 1,62111 Omaha, NE 50 36 86 102 102 45 87812 Oklahoma City, OK 17 24 85 72 47 109 1,27912 San Antonio, TX 21 11 11 20 14 130 2,20114 Durham, NC 94 31 59 48 23 11 51415 Fort Worth-Arlington, TX 108 16 7 4 27 115 2,18716 Seattle, WA 161 53 88 24 35 14 2,69717 Asheville, NC 10 67 84 81 17 82 43018 Charlotte, NC 92 40 55 26 7 52 1,80019 Fayetteville, AR 40 59 13 158 18 133 475
20 Houston, TX 185 8 6 3 25 99 6,103Sources: Moody's Analytics; U.S. Census.
#rankingsdemyst
Top Ranked Places
• 2006: Albuquerque, Raleigh, Houston
• 2007: Raleigh, Provo, Boise• 2008: Raleigh, Boise, Fort Collins• 2009: Raleigh, Fort Collins, Durham• 2010: Des Moines, Provo, Raleigh• 2011: Raleigh, Des Moines, Provo• 2012: Provo, Raleigh, Fort Collins• 2013: Will appear in 9/2 issue (8/7 online)
#rankingsdemyst
#rankingsdemyst
Best States for Business
• Started 2006• Rank 50 states across 35 metrics• 6 main categories: business costs, labor supply, regulatory environment, economic climate, growth prospects, quality of life
• Sources: Moody’s, Census, Bert Sperling, FBI, Tax Foundation, Mercatus Center, SBA, BEA, BLS, United Health Foundation, Pollina Corporate Real Estate, Dept. of Ed., PricewaterhouseCoopers
#rankingsdemyst
Best States Methodology• Business Costs: Moody’s Cost Index on labor, taxes, energy, plus Tax
Foundation index• Labor Supply: college/HS attainment, 5‐year net migration, 5‐year
projected pop. growth• Regulatory: Mercatus Freedom in the 50 States, Pollina tax incentive
study, right‐to‐work, Moody’s bond rating, transportation• Economic Climate: 5‐year growth for incomes, jobs, GSP; avg. 5‐
year unemployment, current unemployment, # of big company headquarters
• Growth Prospects: 5‐year projected growth for incomes, jobs, GSP; VC investments; business openings and closings
• Quality of Life: Poverty & crime rates, cost of living, school test performance, health of the populous, colleges, culture/leisure opportunities, temperature.
Forbes Best States For BusinessBusiness Labor Regulatory Economic Growth Quality Gross State Product
Overall 2011 costs supply environment climate prospects of life 5-yearrank rank State rank rank rank rank rank rank ($bil) change
1 1 Utah 12 4 6 6 9 15 $124 2.3%2 2 Virginia 22 2 1 10 18 4 429 0.73 4 North Dakota 3 15 18 2 5 19 40 6.34 3 North Carolina 2 3 3 21 12 34 440 0.85 5 Colorado 32 1 18 14 4 9 264 1.06 8 Nebraska 4 27 8 3 37 16 94 1.47 6 Texas 23 12 15 1 3 33 1308 2.58 11 Georgia 24 6 2 40 11 37 419 -0.29 13 Oklahoma 7 36 14 4 18 42 155 1.110 10 Iowa 8 40 9 13 40 13 149 1.2
41 39 California 43 30 40 37 1 25 1,959 -0.142 40 Wisconsin 35 39 30 29 43 10 255 -0.143 32 New Mexico 30 28 33 32 22 49 79 0.444 45 Vermont 45 19 49 31 46 14 26 0.045 43 West Virginia 13 49 47 19 48 39 67 1.246 46 Mississippi 18 48 27 36 50 47 98 0.347 47 Michigan 38 50 21 48 40 24 385 -1.748 49 Hawaii 50 21 48 38 35 30 67 -0.349 48 Rhode Island 41 38 50 49 28 18 50 -0.650 50 Maine 40 34 46 44 49 17 52 -0.6
Sources: Moody's Analytics; Pollina Corporate Real Estate; Tax Foundation; Sperling's Best Places;Mercatus Center; Census Bureau; SBA; FBI; Dept. of Education; Forbes.
#rankingsdemyst
Top Ranked States• 2006: Virginia, Texas, NC, Utah• 2007: Virginia, Utah, NC, Texas• 2008: Virginia, Utah, Washington, Texas
• 2009: Virginia, Washington, Utah, Colorado
• 2010: Utah, Virginia, NC, Colorado• 2011: Utah, Virginia, NC, North Dakota
• 2012: Utah, Virginia, North Dakota, NC
• 2013: Will appear in December
#rankingsdemyst
How Communities Can Get Involved
• Places profiled in magazine: Houston (2012); Detroit (2011); college towns (2009); Chattanooga, Des Moines (2008), Spokane, Rome (2007); Albuquerque, Grand Forks (2008)
• Reinventing America series in magazine and online launched in 2012
• Best States‐typically online only• Other content: videos with mayors or governors; op‐ed from Michigan Gov. Rick Snyder
So…What Goes Into Rankings?
#rankingsdemyst
• Definition: The most important aspect to creating any ranked list: How do you define the topic you are looking to quantify? What kind of factors or concepts contribute to that definition?
• Data: How do you measure your definition? What data exists and how thorough is it? Does it come from a trusted source? Is it ‘hard data’, meaning numbers and facts that have been researched and proven? Or is it ‘soft data’ which is qualitative in nature, opinions or popular sentiment measured in surveys and polls?
#rankingsdemyst
• Consistency: Is all of your data measured within the same geographic boundaries? Your measurements need to be standardized to ensure you are ranking everything evenly across the same sample size. (Ex: MSA vs. City Limits)
• Accuracy: Are you utilizing your data correctly? Are you reading the fine print or foot notes? Most important, have you controlled for variables that skew results (ex: absolute measurements v. per capita measurements; rolling‐average for a data set subject to regular changes)
#rankingsdemyst
#rankingsdemyst
Coolest Cities Methodology• Definition: “Cool” is defined by Merriam‐Webster’s dictionary as “very
good; fashionable.”• Data: We used 7 metrics.
– 1. Entertainment Options per capita (museums, festivals, theater and concert venues) ‐Sperling’s Best Places
– 2. Recreational Opportunities per capita (green space, the cost and number of outdoor activities, number of pro and college sports teams) ‐ Sperling’s Best Places
– 3. Restaurants and Bars per capita (focusing exclusively on the locally‐owned businesses rather than chain restaurants) ‐ Sperlings Best Places
– 4. Cultural Diversity (Diversity Index measuring the likelihood of meeting someone of a different race or ethnicity) – Sperlings Best Places
– 5. Median Age (higher ranking tied to lower ages) ‐ U.S. Census Bureau– 6. Net Migration (number of people relocating in 2011) – Moody’s Analytics– 7. Unemployment Rate – Bureau of Labor Statistics
• Consistency: We measured our geographic entities by Metropolitan Statistical Area (MSA), as defined by the Office of Management &Budget, looking at the 65 largest MSAs.
#rankingsdemyst
America’s Coolest Cities
5. Seattle, WA
4. Dallas, TX
3.Los Angeles, CA
2. Washington, D.C.
1. Houston, TX
#rankingsdemyst
#rankingsdemyst
Fastest Growing Cities Methodology• Definition: So‐called Boomtowns, or the fastest growing large metro
areas in terms of both population and economy.• Data: We used 6 metrics.
– 1. & 2. Population Growth (net growth for 2012 and projected growth for 2013) –Moody’s Analytics
– 3. Job Growth (2012) ‐Moody’s Analytics– 4. Gross Metro Product Growth (local economic growth rate, 2012) ‐
Moody’s Analytics– 5. Unemployment Rate – Bureau of Labor Statistics– 6. Income (median salaries for college‐educated workers) ‐ Payscale
• Consistency: We measured our geographic entities by Metropolitan Statistical Area (MSA), as defined by the Office of Management & Budget, looking at the 100 largest MSAs.
#rankingsdemyst
America’s Fastest Growing Cities
5. Salt Lake City, UT
4. Raleigh, NC
3.Dallas, TX
2. Houston, TX
1. Austin, TX
#rankingsdemyst
Lessons Learned From Rankings• It’s All About The Numbers
Your list is only as good as the data you use: 1. Newness. How “fresh” that information is has a huge impact
on the results (ex: home prices; Census data)2. Size. How large the geographic entities are (New York MSA is
vast w. many suburbs affecting data vs. City Division or even Metropolitan Division) ; how large the sample size is (comparing 100 cities v. 20 cities)
• Lists Evolve1. Subjectivity. Every ranking, no matter the data, is going to be
subjective because it rests on your definition. Coolest Cities is the ultimate example.
2. Change. You can always alter the methodology – or improve upon it in future incarnations. Again a great example is Coolest Cities.
#rankingsdemyst
Standout Cities• Lone Star Metros: Houston; Dallas; Austin; San Antonio
• ‘Flyover Country’ Metros: Boise, ID; Denver, CO; Oklahoma City, OK; Provo, UT; Salt Lake City, UT; Minneapolis, MN; Indianapolis, IN
• Southeastern Metros: Raleigh, NC; Charlotte, NC; Washington, D.C.
#rankingsdemyst
Takeaways• Strong local economic data: Dominates when it comes to “Best Cities” lists, especially for a business‐centric outlet like FORBES. Perhaps not surprisingly, areas that have fostered business‐friendly environments, for example low taxes, Right‐to‐work legislation, less regulations have typically performed better economically in the downturn.
• Tech hubs: Every city wants to be one and they should. Strong correlation between cities facilitating local tech economies – and startup‐friendly business environments in general – and high rankings on lists.
#rankingsdemyst
Takeaways• Young and Restless: Like tech, cities with large young college‐educated professional populations tend to clock relatively robust economic growth and rank high on lists.
• Data Collection: Information, data, and numbers tend to vary greatly from place to place. In other words, there is little standardized data from city to city. It limits methodology for lists and is one of the major reasons outlets like FORBES limit their rankings to MSAs and MSADs. This is especially true for quality of life measurements and lifestyle data.
#rankingsdemyst
Thank You For Joining!
Kurt Badenhausenwww.forbes.com/sites/kurtbadenhausen
Morgan Brennanwww.forbes.com/sites/morganbrennan
DCIwww.aboutdci.com/blog