US Living Standard

It may not be a strick financial planning topic, but as I saw many active members having international background, so I'd like to hear your views on this.

The question is is US living standard is definitely higher than that in other countries? Or alternatively, is the cost of living is really cheaper here?

From what can see and feel so far, it may not be true and most people

may not compare on an apple-to-apple basis.

First, granted, as a bigger country, US should be able to offer its resident lower living cost than land-constraint countries such as UK, Japan, Switzerland etc. However I found American's income is not neccessarily higher than others, but the living cost is not that cheaper as most people think. For example, for many professions, UK, HK etc pay not less than US. From the living costs perspective, only imported items (e.g. clothes, electronic gadgets etc) are cheaper, many other things (e.g. utility, banking etc) are not cheap at all.... oddly, the bread/milk are sold more expensive in US than in London!

I also find people are not comparing apple-to-apple. A typical American will spend more than his make (of course, many memebers of this group are much more conservative), while in the rest of world, people spend less than he makes. So if an American who makes $100K, he may have a much more comfortable life than somebody living elsewhere (or even in his neighbourhood) who is paid the same, but may spend less.

Does this make sense to everybody?

Reply to
My interest
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Taking that question at face value, I think the discussion could go two directions. The direction I choose is "quality of life". regardless of the cost, I think the quality of life of a "poor" American is better than that of a "poor" citizen in other places.

Of course then poor needs to be defined (I define as making less than the median income of the country- ~45k in US, correct?)

quality of life in US is clearly better than many alternatives. I had a co worker just spend 6 weeks on assignment in India. He came back with "horror" stories of cab rides where people were sticking arms/legs in cab to prevent cab from moving until he paid this vagrant some money... his escort was responsible for kicking/ fighting these people to allow my coworker to do what he was paid to do...

I heard comments to effect of the roads were crowded with cars, bikes and pedestrians. No stop lights. In middle of intersection was a person riding an elephant (probably why American cars are not imported there?- LOL- the elephant is probably more reliable).

Whether it's cheaper to live in India is one issue, but it was clear from talking with him that our QUALITY of life is much better.

There will be obvious exceptions to this anecdote or other issues brought up regardless of quality. Bill Gates quality of life would be high (because of his wealth) regardless of where he lives if the civilians are civilized.

Reply to
jIM

This might help.

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Anoop

Reply to
anoop

I think it's true as long as you compare US with developing countries. But it may not be a black-and-white if you compare US with other developed countries, especially those "welfare nations".

~45K is the same figure I know. But paid a median salary by definition should not be classified as poor.

I believe your friend's experience. One thing I think most western people does not realize about those emerging countries is that you should not treat them as a whole. Just like BBC commentary put it "If you are talking about China, you need to think there are two Chinas". (i.e. a wealth costal China and a poor inland China). I have not been to India, but I can say most western people who have been to the coastal Chinese cities, like Shanghai, will be amazed. I personally have many US/Euro friends who just want to live there, quoting the quality of live as the reason. Of course, I will be unable to imagine that they will love to live in inland China for the reason of life quality.

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Reply to
My interest

Thanks, it's is useful. Personally I think those statiscs is useful, but at the same time, may be misleading. (For example, I read an analysis few weeks ago that the most profitable single store of many luxury cloths chains are in China, not in New York or London. --- this will be unimaginable if you believe the purchasing power using the average GDP etc).

"self-satisfication" - i.e. they believe, from their heart, that US offers the highest living quality. No other people in the world has such strong believe in their own countries (probably except North Korean ;->) ---- This is people's perception.

Now in reality, I think besides the physcological factors, you need to think about the purchasing power and the availability of consumptions good. The purchasing power is decided by your net income and cost of living. The availability of goods is also important is because otherwise not matter how rich you are, you cannot get anything.

This is where I feel puzzled. average US person does not have the highest purchasing power in the world, and many other countries offer the same level of goods availability as US does. So why people always think US offers highest living standard? Or it's just a faked / blinded belief?

Reply to
My interest

A useful measure of how expensive a country is to divide its GDP at market prices by its GDP in purchasing power parity (PPP) terms. GDP at market prices is how you measure national income at the prices of the country, while GDP in PPP terms takes into account how much it costs the same representative basket of goods in each country.

In 2005, the US had a GDP at market prices of $12.49 trillion, while GDP in PPP terms was $12.31 trillion. That is, the index for the U.S is

101.5% (see
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The UK, for instance, had a GDP at market prices of $2.228 trillion, and a GDP in PPP terms of $1.818 trillion. The index for the U.K is 122.6%, which means that the same basket of goods costs about 20 percent more in the UK than in Britain (see
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Japan: GDP at market prices of $4.664 trillion, and a GDP in PPP terms of $4.025 trillion, i.e, index of 115.8 percent, which means that Japan is about 14 percent more expensive than the U.S.

Germany: GDP at market prices of $2.73 trillion, and a GDP in PPP terms of $2.48 trillion, which means that Germany is about 9 percent more expensive than the U.S.

Finally, my own country (Spain): GDP at market prices of $1.019 trillion, and a GDP in PPP terms of $1.033 trillion, this implies an index of 98.6 percent which means that Spain is about 3 percent cheaper than the U.S.

Of course, these were 2005 data. In 2006, given the depreciation of the U.S. dollar against most major currencies (about 10 percent vs. the Euro, for instance), the U.S should be now cheaper than a year ago.

Reply to
Jose Bailen

Granted, PPP adjusted GDP is much more meaningful than "raw" GDP. However the choice of basket should not be the same among different countries (as correctly pointed out in the Economist's survey). A car in US is an absolute neccessite. But it may not be true in other countries, especially those developing countries / metrolitan cities with good public transportation.

Also, the units/weight of each item in these basket should not be the same as well. For example, gasoline price in US is much cheaper than that in UK. However, I spent much more on gasoline in US than that in UK, simply because I drive much more in US. So, if simply put 1 unit of gasoline in the basket, you may get a false impression.

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Reply to
My interest

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