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Do Scandinavians Live Better than Americans?

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Statistics on living standards are important, but they don’t capture all relevant aspects of conditions that make people’s lives better or worse. American writer Bruce Bawer, now having lived for six years in Oslo, uses his everyday observations of life in Norway [2] as a basis for concluding that Scandinavian countries are not as wealthy as they are proclaimed to be.

For example, he notices that many fewer Norwegians than Americans (and even than the allegedly much poorer Spaniards) eat lunch at restaurants or delis. Norwegians eat bag lunches brought from home. And Norwegians

hang on to old appliances and furniture that we [Americans] would throw out. And they drive around in wrecks. In 2003, when my partner and I took his teenage brother to New York – his first trip outside of Europe – he stared boggle-eyed at the cars in the Newark Airport parking lot, as mesmerized as Robin Williams in a New York grocery store in "Moscow on the Hudson.

Personal experience and anecdotes, of course, are notoriously subject to misinterpretation. But they are not irrelevant.

Bawer’s observations of everyday life in Norway – and his conclusion that the standard of living there (and in other Scandinavian countries) is lower than popularly believed – is supported by this interesting study [3] from the Swedish thinktank Timbro [4]. As summarized by Bawer, this study finds that:

After adjusting the figures for the different purchasing powers of the dollar and euro, the only European country whose economic output per person was greater than the United States average was the tiny tax haven of Luxembourg, which ranked third, just behind Delaware and slightly ahead of Connecticut.

The next European country on the list was Ireland, down at 41st place out of 66; Sweden was 14th from the bottom (after Alabama), followed by Oklahoma, and then Britain, France, Finland, Germany and Italy. The bottom three spots on the list went to Spain, Portugal and Greece.

Alternatively, the study found, if the E.U. was treated as a single American state, it would rank fifth from the bottom, topping only Arkansas, Montana, West Virginia and Mississippi. In short, while Scandinavians are constantly told how much better they have it than Americans, Timbro’s statistics suggest otherwise.

Bawer goes on to site this excellent article [5] by Johan Norberg [6] – in which Norberg nicely discuses "the American dream vs the European daydream."

…..

Many people might accept the claim that the typical American lives more opulently than the typical Scandinavian, but still prefer the Scandinavian model because the poorest people there are thought to be better off than the poorest people in the U.S. Christian Science Monitor writer David Francis indicts the U.S. system [7] for being unusually harsh to poor Americans.

But even if it’s true that the purchasing power of the typical poor Scandinavian is greater than the purchasing power of the typical poor American, it does not follow that poor Americans are worse off than poor Scandinavians.

Here’s a letter that I sent recently to the Christian Science Monitor explaining why.

Dear Editor:

David Francis reports that poor Americans have lower purchasing power than do poor people in many other industrialized countries ("It’s Better to be Poor in Norway than in the U.S.," April 14). Perhaps. But Mr. Francis too quickly indicts U.S. policy for doing too little to help the poor and to smooth out income distribution.

Consider two important facts. First, as Mr. Francis acknowledges, middle- and high-income Americans are much wealthier than their peers elsewhere. Second, no one is stuck in whatever income category he or she currently is in. Therefore, a low-income American today – say, a college student waiting tables – enjoys much brighter lifetime economic prospects than does a similarly situated low-income European, even if this European is wealthier today. The inequality of income that Mr. Francis laments, far from harming low-income Americans, raises their lifetime earning prospects above those of low-income peoples elsewhere.

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University

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