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LynnwoodRooster's Journal: Fun with GDP Figures... 2

Journal by LynnwoodRooster
Much has been made of the Wikipedia entries showing relative GDP per capita; many point to the high GDP of Ireland and Norway as indicative that the the US economic engine really isn't that good and that a socialist approach is inherently superior.  However, I believe that rating really isn't worth much.  Making a lot is one thing; GETTING a lot is another!

Rather than just look at the GDP, or GDP per capita, I think a better index is what I call the Prosperity Index - factoring in purchasing power with that GDP.  It's one thing to make a ton of cash; it's another to pay very little.  I've seen this effect first-hand, when a friend left his $80K/year engineering job here in Seattle for a $145K/year job in San Jose.  His actual cost of living more than doubled, and after two years he moved back.  Why?  He actually keeps more by living here, paying less!

There's a VERY convenient measure of purchasing power: the Economist magazine's Big Mac Index - the BMI (see http://www.economist.com/markets/indicators/displaystory.cfm?story_id=8649005).  This index uses the price of a Big Mac to equalize the purchasing power of a dollar throughout the world.  It's been used for many years, and is actually a pretty good indicator of the cost of living throughout the world.

Taking that into account, we can divide the GDP per capita by the BMI and end up with the Prosperity Index - a measure of the buying power (essentially relative effective income) per person.

Without further ado, here's the table for selected countries (significant political/development countries where I could find individual ratings for both GDP and the BMI):

Country        GDP        BMI   Prosperity
-------     ----------   -----  -----------
Japan       $34,188.00   $2.31  14800.00000
USA         $44,190.00   $3.22  13723.60248
Australia   $36,553.00   $2.67  13690.26217
Canada      $38,951.00   $3.08  12646.42857
Norway      $72,306.00   $6.63  10905.88235
Denmark     $50,965.00   $4.84  10529.95868
Switzerland $51,771.00   $5.05  10251.68317
Britain     $39,213.00   $3.90  10054.61538
Sweden      $42,383.00   $4.59   9233.76906
EU          $29,476.00   $3.82   7716.23036
Iceland     $54,858.00   $7.44   7373.38709
South Korea $18,392.00   $3.08   5971.42857
Russia       $6,856.00   $1.85   3705.94594
Malaysia     $5,718.00   $1.57   3642.03821
Chile        $8,864.00   $3.07   2887.29641
China        $2,001.00   $1.41   1419.14893

Of interest is that Japan leads the way; the Yen is really quite strong, and the GDP is quite healthy.

The US comes in at number 2, probably not a shock to many.

What will be shocking is that the EU and European countries in general fall so far.  Well down the list, well past Canada and Australia.  For example, Norway - mighty in the GDP ratings - tumbles to nearly 21% below the US, and 14% below Canada.  So that high GDP really doesn't bring a lot of economic purchasing power; it simply takes more money to live in Norway.
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Fun with GDP Figures...

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  • by doug (926)

    I don't know if they chose this intentionally or not but the TLA BMI is both Big Mac Index and Body Mass Index. When I first glanced at your data I thought you were correlating wealth to obesity. But considering the effect of Big Mac's on weight gain, maybe that isn't far off base.

    On a more serious note, I used to live in the Social Democratic Republic of France, and I can say first hand that I make a lot more money in the US. While my expenses are higher here, especially with medical and childcare

    • I thought the BMI tie-in via the Big Mac and Body Mass is pretty accurate! Maybe the Economist should start writing for Science Mag, too...:)

      Thanks for the comments about income in France, too!

There is no opinion so absurd that some philosopher will not express it. -- Marcus Tullius Cicero, "Ad familiares"

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