Sunday, March 17, 2013

A statistic where America is doing better than counterparts

There are many ways to measure a country's socioeconomic standing, health care markers, suicide rate, unemployment, wages, GDP, GDP per Capita, Geni coefficient, Human development Index, and many many more. In many of these Scandinavia usually comes up on top... except for one...

When it comes down to average household disposable income, the United States comes out on top. We do not come out on top in terms of GDP per Capita, but when it comes down to household income we are number one, ahead of every other country. When it comes down to consumer price index we also beat most Scandinavian countries. Basically, when people say that the United States has an extremely high quality of living in regard to Europe when it comes to consumable goods there is truth in that.

When it comes down to how well this is spread across the economy, the answer of who is better off becomes less apparent. That is the problem with the mean, you can have people at the top who throw the whole scale off, which isn't immediately apparent. This is why comparing with the median household income is so important. Then you see Luxembourg surpasses us. The second problem I wish to present is that it doesn't take into effect how much of the pay goes into paying for expenses, say taxes, houses, transportation, utilities, etc. which makes the whole question a lot more complicated. That is one of the big problems in economics. While a lot of people want to say that one statistic is the #1 holy grail of economic well-being, they forget a few possible situations such as; it doesn't matter if your wage is going up if prices are rising higher, the median wage is rising but most people are worse off, and it truly isn't dreadful that you have a deflation rate of -0.1% if your population is diminishing at -0.5%, which would be a case where the mean wealth per capita is increasing which is good in any case I can think of.

Economics has a lot of parts to it, and it is very important to not get so obsessed with one variable or another that you forget all other variables. They are all important, and they all must be taken in perspective to everything else.

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