Blog Post

Insight: Measuring Economic Diversity: The Hachman Index, 2017

By: DJ Benway

This week the Gardner Policy Institute released the first annual research brief, Measuring Economic Diversity: The Hachman Index, 2017.  The Hachman Index is a measure of the economic diversity of a region based on how closely the composition of industries matches that of a larger and well-diversified reference region. The index was developed by Frank Hachman, economist and Associate Director of the forerunner to the Kem C. Gardner Policy Institute (the University of Utah’s Bureau of Economic and Business Research). The index has become nationally recognized as a measure of regional economic specialization or diversity.

Hachman Index scores are normalized from 0 to 100. A higher score indicates more economic diversity, while a lower score indicates less economic diversity. According to a Hachman Index analysis, Utah’s industrial distribution is one of the most diverse in the nation (see Figure 1). The Hachman Index is not an exact measure, and because Utah and Missouri have near identical scores—96.9 and 96.8, respectively—it is not definitive that Utah is more economically diverse than Missouri.

Utah is not only a clear leader in the nation, but is also a standout in the West. Arizona, Colorado, and California are the only other western states to have scores above 90. Utah’s industr