Comparing Europe and the US: Alternative Measures of Economic Well-Being

Yesterday I went into some detail regarding official national income statistics and what they tell us about income differences between the US and Western Europe. And in particular, I drew attention to some of the limitations of those aggregate income statistics. So given the fact that GDP or National Income is a very imperfect way to compare economic well-being, what other data can help us to get a sense for which side of the Atlantic is doing better?

The point of the last post was that we should not rely on any one single indicator to judge who’s more advanced, but rather assemble a variety of measures and build a composite sketch from their collection. So here are some brushstrokes that help us to paint a more complete picture.

Hours of work (source: OECD):


This one was noted by several commenters, who are quite correct that the difference in time spent at work makes a significant difference to well-being. Europeans certainly manage to have a lot more time to spend relaxing with friends and family than Americans do (family values, anyone?), and furthermore Europeans have generally chosen to take a larger share of their increased wealth in the form of time away from the office over the past 20 years.

Access to broadband (source: World Bank):


It surprises me that the country that leads the world in internet technology lags in broadband internet access out of this group.

Investment in transportation infrastructure (source: Int'l Transport Forum):


No surprise that the US woefully underinvests in rail transportation, except perhaps for the magnitude of the difference. (Though if you ever ride Amtrak, then perhaps even that is unsurprising.) Europeans are convinced that rail travel is efficient and comfortable, while Americans... clearly aren’t.

But the fact that the US also isn't keeping up with Europe in maintaining roads does surprise me a bit. Since the US depends so heavily on road transport as the backbone of its transportation infrastructure, as well as for daily commuting purposes, I would have guessed that the US put more resources into roads than European countries. But now that I see this data, and think about the rough-and-tumble driving experiences and long commuting times that one regularly faces across the US, then I realize that better and safer roads (in addition to better rail transport, of course) are actually a significant reason why Western Europe may feel like it's better functioning, more modern, and, well, richer than the US. For more on this, you might want to check out a recent Economist article about the US's shabby transportation infrastructure (the source for the chart to the right).


Money spent on what the OECD defines as “Recreation and Culture” (source: the OECD's PPP benchmark survey):


Germans seem to be particularly stingy when it comes to spending on culture and recreation, and I don't have a good theory to explain that one...

Finally, just for fun (and because this seemed of particular interest to numerous readers), here’s a rather unscientific look at what vacations cost in Europe compared to the US. I’ve tried to match up vacation pairs that are roughly comparable in terms of distance and style, all vacations are for 7 nights, and I’ve listed the second-lowest price that I found for each search using Orbitz for the US and Thomas Cook for the UK and France.

Vacation Affordability:


This casual comparison suggests that my assertion the other day that international travel (by which, for Europeans, I mean outside of Europe) is more affordable for Europeans than Americans was not unreasonable, though actually the differences are not really very large. Obviously this is not a scientific comparison, but it’s fun to see nevertheless. (And again, note that this is a case where the relatively weak dollar has a direct impact on the relative wealth of Western Europe compared to the US.)

The particular measures I’ve looked at are generally consistent with my sense that Western Europeans are now, on average, "richer" than Americans. But of course, I had to choose which indicators to try to find data for, and naturally I opted to research the types of indicators that I personally think are important reflections of a country’s economic well-being. Others may have very different opinions about that, however, and thus believe different indicators would be better. (For example, if you think having more cars per household is a good measure of well-being, I'm sure the US would trounce these European countries.) Feel free to suggest some other types of data to look at, or even send me your own comparisons, if you like. If I get some interesting other measures, I’ll put them up in a follow-up post.