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I like how they calculated consumption, rather than income or net wealth. That's a more honest way of comparing poverty in different countries.

CobrastanJorji 7y ago
Is consumption defined as spending, though? If an apple costs $1 in the US but 25 cents in Europe, and a poor person in each place is provided a free apple by the government, did the poor person in the US have 4 times the consumption?
- why_only_15 7y ago
  The way you adjust for the first effect is to adjust by Purchasing Power Parity, which they did.
  - rndgermandude 7y ago
    Well, you try to adjust by Purchasing Power Parity. That works well for things where you can directly compare, like the price of an apple. However, it doesn't work so well for other goods and services, e.g. single payer health care vs health care costs in the US, because at best you're comparing apples to oranges. On top of that, it does not account for things you may need in one nation but not in another. E.g. cars spring to mind. In the US you need a car in most places even the bigger cities, to get to work for example. In a lot of places in the EU you don't.
    - gridlockd 7y ago
      Having a car and being able to drive it around is a form of wealth. Cars in the US are also much more affordable. The "I don't need it" argument only goes so far. You can't go shop a lot of groceries. You can't transport bigger items. You can't go on a road trip. You travel according to whatever public transport affords you. I might just as well say "I don't need it" in regards to healthcare. You don't need it until you do, but then you can't afford it.
Reason077 7y ago
I'm not sure it's an entirely fair way to define poverty. In many parts of Europe you can have a relatively high standard of living without consuming (or even owning) all that much. For example, you can have a high standard of living without owning a car (and all the 'consumption' that goes along with that), in cities that have good public transport, and a good infrastructure/environment for walking and cycling. In much of the US, that's difficult or impossible.
- rayiner 7y ago
  But if consumption capacity was equal in Europe, that consumption would shift to something else, such as food and entertainment. People in New York City don’t consume less because they don’t own a car—they spend more money eating out, etc. And Europeans are hardly ascetics. It’s fair to assume that in both places, if people had more means to consume they would.
  - Infinitesimus 7y ago
    > It’s fair to assume that in both places, if people had more means to consume they would. Not the parent commenter but why do you think they would if they could? Consumption habits across borders aren't as obvious to me because of advertising, culture, etc.
    - rayiner 7y ago
      Consumption habits don’t vary that much in the developed world. The household savings rate is 5-10% in most countries, with the US being lower than famously frugal Germany, but higher than Italy or Spain: https://www.gfmag.com/global-data/economic-data/916lqg-household-saving-rates https://www.gfmag.com/global-data/economic-data/916lqg-house.... (Switzerland and Luxembourg being heavily financialized countries seem to be outliers.)
  - Reason077 7y ago
    > "But if consumption capacity was equal in Europe, that consumption would shift to something else, such as food and entertainment." Yes. But my point is that not all consumption can be considered equal in terms of the wellbeing and quality of life that it provides. For example, if I was spending $5000 per year on car payments and fuel for my commute to work, that's a lot of 'consumption'. But it isn't something that makes me happy or feel fulfilled. On the other hand, suppose I live in a city where I can walk, cycle, or ride a tram to work. My quality of life might be equal or better - yet I'm consuming $5000 less.

CobrastanJorji 7y ago

Is consumption defined as spending, though? If an apple costs $1 in the US but 25 cents in Europe, and a poor person in each place is provided a free apple by the government, did the poor person in the US have 4 times the consumption?

why_only_15 7y ago
The way you adjust for the first effect is to adjust by Purchasing Power Parity, which they did.
- rndgermandude 7y ago
  Well, you try to adjust by Purchasing Power Parity. That works well for things where you can directly compare, like the price of an apple. However, it doesn't work so well for other goods and services, e.g. single payer health care vs health care costs in the US, because at best you're comparing apples to oranges. On top of that, it does not account for things you may need in one nation but not in another. E.g. cars spring to mind. In the US you need a car in most places even the bigger cities, to get to work for example. In a lot of places in the EU you don't.
  - gridlockd 7y ago
    Having a car and being able to drive it around is a form of wealth. Cars in the US are also much more affordable. The "I don't need it" argument only goes so far. You can't go shop a lot of groceries. You can't transport bigger items. You can't go on a road trip. You travel according to whatever public transport affords you. I might just as well say "I don't need it" in regards to healthcare. You don't need it until you do, but then you can't afford it.

Reason077 7y ago

I'm not sure it's an entirely fair way to define poverty. In many parts of Europe you can have a relatively high standard of living without consuming (or even owning) all that much. For example, you can have a high standard of living without owning a car (and all the 'consumption' that goes along with that), in cities that have good public transport, and a good infrastructure/environment for walking and cycling. In much of the US, that's difficult or impossible.

rayiner 7y ago
But if consumption capacity was equal in Europe, that consumption would shift to something else, such as food and entertainment. People in New York City don’t consume less because they don’t own a car—they spend more money eating out, etc. And Europeans are hardly ascetics. It’s fair to assume that in both places, if people had more means to consume they would.
- Infinitesimus 7y ago
  > It’s fair to assume that in both places, if people had more means to consume they would. Not the parent commenter but why do you think they would if they could? Consumption habits across borders aren't as obvious to me because of advertising, culture, etc.
  - rayiner 7y ago
    Consumption habits don’t vary that much in the developed world. The household savings rate is 5-10% in most countries, with the US being lower than famously frugal Germany, but higher than Italy or Spain: https://www.gfmag.com/global-data/economic-data/916lqg-household-saving-rates https://www.gfmag.com/global-data/economic-data/916lqg-house.... (Switzerland and Luxembourg being heavily financialized countries seem to be outliers.)
- Reason077 7y ago
  > "But if consumption capacity was equal in Europe, that consumption would shift to something else, such as food and entertainment." Yes. But my point is that not all consumption can be considered equal in terms of the wellbeing and quality of life that it provides. For example, if I was spending $5000 per year on car payments and fuel for my commute to work, that's a lot of 'consumption'. But it isn't something that makes me happy or feel fulfilled. On the other hand, suppose I live in a city where I can walk, cycle, or ride a tram to work. My quality of life might be equal or better - yet I'm consuming $5000 less.