What National Data Can't Count
A new report from Capital One and the Center on Rural Innovation, Roots of Prosperity, looks at what helps entrepreneurship take root in rural America. It measures seven kinds of community capital across U.S. counties, then goes on the ground in places like Bozeman, Montana, to see how those assets actually work.
The most useful line in it is about what the data missed.
Gallatin County, home to Bozeman, ranks in the 24th percentile nationally on social capital. Yet founders there described social capital as one of the county's clear strengths: "one degree of separation," a culture of the warm handoff, people who will meet with you even when you cold-call them. The researchers put it plainly. The gap between the ranking and what they heard "is itself a finding, a sign of how much of what matters here is informal, and hard for a national indicator to count."
That's the whole problem in one sentence.
We count entities, not people showing up
Look at how the report measures these things. Social capital is the share of residents born in-state, the share who are veterans, and the density of business associations and civic, professional, religious and nonprofit organizations. Political capital is voter turnout, the density of political and labor organizations, and local government employment and revenue.
When they ran the numbers, the density of political and labor organizations was negatively associated with entrepreneurship, while voter turnout was positively associated with it. Broad civic participation goes hand in hand with entrepreneurship. The density of organized interests does not.
Put those together and you'll see a regular, and misleading, pattern in economic development. If we only count where organizations are, or how many named institutions a place has, all we're counting is entities. What matters, and what should be measured, is how and why people show up. Voter turnout is one imperfect proxy the researchers found. We need better ones.
How we measure directly affects how money flows.
The barrier to exit
The report makes a point about incentives that deserves more attention: "A subsidy can leave when the firm that received it leaves." A subsidized large company has almost no barrier to exit. When the incentive runs out, it hops to the next one.
A local entrepreneur can't. Her customers are here. Her suppliers, her lender and the people who vouched for her are here. It's also her home, the one she put up against the business loan or the credit line. That barrier to exit is relationships, and it's a big part of why local founders end up as pillars of local culture and civic life.
The researchers land somewhere similar on political capital. Whether it helps or hurts entrepreneurship "may depend less on how much political capital a place has than on who holds it and what they choose to do with it."
What to do with this
If you fund, run or evaluate entrepreneurship programs, the question isn't how many organizations your region has. It's whether people show up, who vouches for whom, and whether the founders who can't leave are the ones your money reaches. That's the argument behind our research, The Wrong Metrics, and it's good to see a national study run into the same wall from a different direction.
Read the full report: Roots of Prosperity: How Community Assets Create the Conditions for Rural Entrepreneurship (Center on Rural Innovation, October 2026).
