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> But debts in the Alpine country are far higher than in the US... Debts make this comparison difficult to make meaningful. A few cases: - Minimum wage earne

> But debts in the Alpine country are far higher than in the US... Debts make this comparison difficult to make meaningful. A few cases: - Minimum wage earner barely scrapes by but does not seek any credit. - Someone in a high cost of living area takes out a mortgage. - A young neurosurgeon with fresh educational debt takes on a very high paying job. - A billionaire borrows to finance a major real estate project The net worth of these cases goes from highest to lowest. The "means" run in the opposite direction. Sometimes indebtedness is poverty. Sometimes it's consumption smoothing. Sometimes it's a reasonable investment in a home or earning potential. Sometimes it's a dangerous source of leverage on a foolish bet. I don't know how we disentangle all those when trying to measure or compare human welfare. > the strength of the US dollar [also contributed] If high Swiss property values and a strong US dollar conspire to to flip the #1 and #2 countries on this specific metric, I'm worried we're drifting into Spaceballs territory. What's all this mean? Possibly... absolutely nothing.

ineedasername 7y ago
> I don't know how we disentangle all those when trying to measure or compare human welfare. I think they just aren't very good metrics for measuring or comparing human welfare. There might not be any single or small groups of metrics that do any better either. It's a nebulous and complex thing that doesn't have easy answers. Of course in the hierarchy of human needs basic financial security to secure food, shelter, etc is pretty important and a precursor for positive welfare, but not really a sufficient condition.
on_and_off 7y ago
>I don't know how we disentangle all those when trying to measure or compare human welfare. One number I like to use is the IHDI : https://www.wikiwand.com/en/List_of_countries_by_inequality-adjusted_HDI https://www.wikiwand.com/en/List_of_countries_by_inequality-... There can be an endless debate on the methodology of course and I don't think this number should be taken as an absolute truth. It does give a more holistic picture though and takes many more factors into account.
jcheng 7y ago
When you take out a loan, it doesn't decrease your net worth, right? If I'm worth $X, then I take out a $1MM loan, at that moment I'm still worth approximately $X (because the $1MM the bank gave me and $1MM I owe the bank cancel each other out). So I'd rank them as: - Billionaire - Home owner - Minimum wage earner - Neurosurgeon
- lonelappde 7y ago
  Why is a house an asset but an education isn't? Do you think a potential spouse would pass over the neurosurgeon?
  - indecisive_user 7y ago
    A house is a nearly guaranteed asset. The value will likely steadily rise throughout the years, and with good homeowners insurance you'll get paid even if the house is destroyed. An education guarantees nothing. The neurosurgeon could die, or suffer an injury preventing them from performing surgery, or just plain quit and decide to pursue art instead. Of course the neurosurgeon has a significantly higher potential future value, but it's an unrealized asset. Also, it's possible to discharge a mortgage through bankruptcy, while student loans are much more difficult to discharge, so you're effectively stuck with that debt forever regardless of your career choice.
    - mulmen 7y ago
      I see how a house can be considered an asset but if you sell your house where do you live? Sure you can downsize but it's still not purely an asset, you are using it at least in part to fulfill a basic human need.
      - mindentropy 7y ago
        > I see how a house can be considered an asset but if you sell your house where do you live? Give the house for rent and live in a smaller house.
throwaway9d0291 7y ago
An important detail here is that in Switzerland it's somewhat normal to simply never pay back your mortgage, so many people will keep around a bunch of debt because it doesn't make financial sense to eliminate it. When you get a mortgage it's usually broken into two amounts: an amount that you have to pay back (~30% if I remember right) and an amount that you don't (the rest). You can simply pay back the first amount quickly then pay interest on the second amount indefinitely. Interest rates here are extremely low (even a 15-year fixed-rate mortgage can be had for <1%) so you can keep the low interest loan and put the money elsewhere (e.g. stocks if you like to live on the edge).
- abiro 7y ago
  It’s mainly for tax reasons: “If you are a homeowner in Switzerland, you have to pay income tax on what is known as its ‘rental value’. The rental value theoretically represents what you as owner would receive if you rented the property to someone else, i.e. what that tenant would pay you in rent. At the same time, you can deduct mortgage interest payments and other costs for the upkeep of the property from your taxable income.” https://www.ch.ch/en/rental-value/ https://www.ch.ch/en/rental-value/
  - jlangenauer 7y ago
    Wait, you have to pay income tax on income you could theoretically receive? I'm fascinated to know what possible justification there is for this? (Genuine, not rhetorical question.)
    - hvidgaard 7y ago
      Think of it as a tax just like on land, but for buildings. The reasoning is that housing represents an asset that should not be bought just for speculation, i.e. buy it and let it sit empty until the price is high enough for the investor to make a good profit. Of course they're free to do just that, but all housing which people can live in, are taxed as if you had that income.
      - 7y ago

ineedasername 7y ago

> I don't know how we disentangle all those when trying to measure or compare human welfare. I think they just aren't very good metrics for measuring or comparing human welfare. There might not be any single or small groups of metrics that do any better either. It's a nebulous and complex thing that doesn't have easy answers. Of course in the hierarchy of human needs basic financial security to secure food, shelter, etc is pretty important and a precursor for positive welfare, but not really a sufficient condition.

on_and_off 7y ago

>I don't know how we disentangle all those when trying to measure or compare human welfare. One number I like to use is the IHDI : https://www.wikiwand.com/en/List_of_countries_by_inequality-adjusted_HDI https://www.wikiwand.com/en/List_of_countries_by_inequality-... There can be an endless debate on the methodology of course and I don't think this number should be taken as an absolute truth. It does give a more holistic picture though and takes many more factors into account.

jcheng 7y ago

When you take out a loan, it doesn't decrease your net worth, right? If I'm worth $X, then I take out a $1MM loan, at that moment I'm still worth approximately $X (because the $1MM the bank gave me and $1MM I owe the bank cancel each other out). So I'd rank them as: - Billionaire - Home owner - Minimum wage earner - Neurosurgeon

lonelappde 7y ago
Why is a house an asset but an education isn't? Do you think a potential spouse would pass over the neurosurgeon?
- indecisive_user 7y ago
  A house is a nearly guaranteed asset. The value will likely steadily rise throughout the years, and with good homeowners insurance you'll get paid even if the house is destroyed. An education guarantees nothing. The neurosurgeon could die, or suffer an injury preventing them from performing surgery, or just plain quit and decide to pursue art instead. Of course the neurosurgeon has a significantly higher potential future value, but it's an unrealized asset. Also, it's possible to discharge a mortgage through bankruptcy, while student loans are much more difficult to discharge, so you're effectively stuck with that debt forever regardless of your career choice.
  - mulmen 7y ago
    I see how a house can be considered an asset but if you sell your house where do you live? Sure you can downsize but it's still not purely an asset, you are using it at least in part to fulfill a basic human need.
    - mindentropy 7y ago
      > I see how a house can be considered an asset but if you sell your house where do you live? Give the house for rent and live in a smaller house.

throwaway9d0291 7y ago

An important detail here is that in Switzerland it's somewhat normal to simply never pay back your mortgage, so many people will keep around a bunch of debt because it doesn't make financial sense to eliminate it. When you get a mortgage it's usually broken into two amounts: an amount that you have to pay back (~30% if I remember right) and an amount that you don't (the rest). You can simply pay back the first amount quickly then pay interest on the second amount indefinitely. Interest rates here are extremely low (even a 15-year fixed-rate mortgage can be had for <1%) so you can keep the low interest loan and put the money elsewhere (e.g. stocks if you like to live on the edge).

abiro 7y ago
It’s mainly for tax reasons: “If you are a homeowner in Switzerland, you have to pay income tax on what is known as its ‘rental value’. The rental value theoretically represents what you as owner would receive if you rented the property to someone else, i.e. what that tenant would pay you in rent. At the same time, you can deduct mortgage interest payments and other costs for the upkeep of the property from your taxable income.” https://www.ch.ch/en/rental-value/ https://www.ch.ch/en/rental-value/
- jlangenauer 7y ago
  Wait, you have to pay income tax on income you could theoretically receive? I'm fascinated to know what possible justification there is for this? (Genuine, not rhetorical question.)
  - hvidgaard 7y ago
    Think of it as a tax just like on land, but for buildings. The reasoning is that housing represents an asset that should not be bought just for speculation, i.e. buy it and let it sit empty until the price is high enough for the investor to make a good profit. Of course they're free to do just that, but all housing which people can live in, are taxed as if you had that income.
    - 7y ago