3 ms·

Yikes. Measuring wellbeing by consumption is a VERY American perspective.

by mdoms 6y ago

cynicalkane 6y ago
Consumption is the income and wealth that you end up using. Measuring wellbeing by consumption is the standard economic perspective, since it describes how much of society's goods and services one ends up using. More simply, if you save then spend, wealth-based measures will rate you as better off than a person with higher income who just spends. That doesn't make sense.
- mdoms 6y ago
  A wealth measure will give a higher rating to someone who spends on assets than someone who spends on Fortnite skins. What it doesn't do is arbitrarily favor someone who lives in a HCOL area or in a country (sorry, the country) that forces individuals to spend their own money on things like health care.
  - HPsquared 6y ago
    Someone living in a HCOL area who happens to have bought their house before the price inflation era, would have a high wealth figure but unable to do anything with said wealth. Australia has high house prices.
- kennywinker 6y ago
  This is confusing. If you save, you have more wealth. If you have more wealth, you are more resilient to hardships (economic, health, etc.) - a population of people with large savings accounts and low debt seems obviously better than a population that makes a ton of money but lives close to the wire or carries large debts
  - jldugger 6y ago
    The problem though is that personal savings grows over time -- a nation full of young people with high incomes will eventually become a nation full of weathly old people, but if you were to compare the two nations, the yard stick matters. edit: if you want to cook up some evidence, look at a scatter plot of some indicator of age (national average age?) vs national average wealth. I suspect, given the countries at the top of the list, you'll end up with a pretty good r.
  - scatters 6y ago
    Resilience is unnecessary in countries with a safety net. Are individuals in those countries who make the rational decision to save less somehow worse off than those who have to carry a large savings buffer to guard against misfortune?
    - Polylactic_acid 6y ago
      >Resilience is unnecessary in countries with a safety net Not entirely. Having a safety net might be the difference between having a home/food and being on the street but having savings and a safety net allows you to live your previous comfortable life while not working. If you have a healthy savings then you can afford to willingly leave your current job and have some time to yourself while you look for a better job.
    - im3w1l 6y ago
      Safety net usually come with caveats. Foodstamps are as their name suggests not general purpose dollars. Sometimes you have to perform tasks you don't want to do to benefit from the safety net. Your own money can be used for whatever you want and no need to beg and justify before a government employee.
  - nearbuy 6y ago
    I think you're double counting the advantage for wealth if you consider resilience an advantage, but don't consider not spending money to be a disadvantage. Keeping money reserved for hardships is a lot like having spent the money, since you can no longer use that money to increase your standard of living. If you put away $50,000 in case of job loss or health problems, you've bought resilience at the opportunity cost of $50,000 worth of something else. If you change your mind later and spend it, you just traded in your resilience for other goods and services. You have the benefit of resilience or the benefit of whatever else you might buy with that money, but not both at the same time. When you look at consumption numbers for a country, they already include what people have spent to deal with hardships. Wealth, however, doesn't tell you how much in poverty someone had to live in order to save that wealth. Insurance is a formal way of spending money on resilience. Insurance, though, has the advantage of pooling risk among a large number of people. You don't actually have to save up millions to be insured for millions in healthcare bills. Someone with excellent insurance but little savings can have both more resilience and a higher standard of living than someone who lives in poverty to save every penny, but doesn't spend on insurance.
- fulafel 6y ago
  > Measuring wellbeing by consumption is the standard economic perspective Behavioural economics has long focused on more sensible sets of metrics.
qeternity 6y ago
And how would you measure it?
ertian 6y ago
But median wealth per adult is okay?
nearbuy 6y ago
It's not an American perspective; it's an economic perspective. The parent comment isn't talking about people's psychological wellbeing, but "how people actually live" (in terms of do they live in poverty or like rich people). Wealth doesn't capture that. For example, you might have someone living in extreme poverty in Guatemala who has no electricity or running water, a small home with a mud floor, and eats mostly rice and beans and similar. If this person has no debt, they might have a very small but positive net worth. Meanwhile, you can have someone from America with negative net wealth living a middle class life. The Guatemalan might be spending the equivalent of $600 per year, while the American might be spending 50x that. Looking at spending better captures who is living in poverty. Wealth can also fail to capture how the wealthy live. Warren Buffett is notoriously frugal. Looking at wealth, you'd find he's about 180,000x wealthier than the mean American adult. Yet he has one house which he bought for $31,500 in 1958, and apparently eats breakfast at McDonald's each morning for no more than $3.17. The vast majority of his wealth will be going to charity. Looking at his spending gives you a more accurate picture of how he lives than looking at his wealth.

Yikes. Measuring wellbeing by consumption is a VERY American perspective.

by mdoms 6y ago

Yikes. Measuring wellbeing by consumption is a VERY American perspective.

Consumption is the income and wealth that you end up using. Measuring wellbeing by consumption is the standard economic perspective, since it describes how much of society's goods and services one ends up using. More simply, if you save then spend, wealth-based measures will rate you as better off than a person with higher income who just spends. That doesn't make sense.

mdoms 6y ago
A wealth measure will give a higher rating to someone who spends on assets than someone who spends on Fortnite skins. What it doesn't do is arbitrarily favor someone who lives in a HCOL area or in a country (sorry, the country) that forces individuals to spend their own money on things like health care.
- HPsquared 6y ago
  Someone living in a HCOL area who happens to have bought their house before the price inflation era, would have a high wealth figure but unable to do anything with said wealth. Australia has high house prices.
kennywinker 6y ago
This is confusing. If you save, you have more wealth. If you have more wealth, you are more resilient to hardships (economic, health, etc.) - a population of people with large savings accounts and low debt seems obviously better than a population that makes a ton of money but lives close to the wire or carries large debts
- jldugger 6y ago
  The problem though is that personal savings grows over time -- a nation full of young people with high incomes will eventually become a nation full of weathly old people, but if you were to compare the two nations, the yard stick matters. edit: if you want to cook up some evidence, look at a scatter plot of some indicator of age (national average age?) vs national average wealth. I suspect, given the countries at the top of the list, you'll end up with a pretty good r.
- scatters 6y ago
  Resilience is unnecessary in countries with a safety net. Are individuals in those countries who make the rational decision to save less somehow worse off than those who have to carry a large savings buffer to guard against misfortune?
  - Polylactic_acid 6y ago
    >Resilience is unnecessary in countries with a safety net Not entirely. Having a safety net might be the difference between having a home/food and being on the street but having savings and a safety net allows you to live your previous comfortable life while not working. If you have a healthy savings then you can afford to willingly leave your current job and have some time to yourself while you look for a better job.
  - im3w1l 6y ago
    Safety net usually come with caveats. Foodstamps are as their name suggests not general purpose dollars. Sometimes you have to perform tasks you don't want to do to benefit from the safety net. Your own money can be used for whatever you want and no need to beg and justify before a government employee.
- nearbuy 6y ago
  I think you're double counting the advantage for wealth if you consider resilience an advantage, but don't consider not spending money to be a disadvantage. Keeping money reserved for hardships is a lot like having spent the money, since you can no longer use that money to increase your standard of living. If you put away $50,000 in case of job loss or health problems, you've bought resilience at the opportunity cost of $50,000 worth of something else. If you change your mind later and spend it, you just traded in your resilience for other goods and services. You have the benefit of resilience or the benefit of whatever else you might buy with that money, but not both at the same time. When you look at consumption numbers for a country, they already include what people have spent to deal with hardships. Wealth, however, doesn't tell you how much in poverty someone had to live in order to save that wealth. Insurance is a formal way of spending money on resilience. Insurance, though, has the advantage of pooling risk among a large number of people. You don't actually have to save up millions to be insured for millions in healthcare bills. Someone with excellent insurance but little savings can have both more resilience and a higher standard of living than someone who lives in poverty to save every penny, but doesn't spend on insurance.
fulafel 6y ago
> Measuring wellbeing by consumption is the standard economic perspective Behavioural economics has long focused on more sensible sets of metrics.

qeternity 6y ago

And how would you measure it?

ertian 6y ago

But median wealth per adult is okay?

nearbuy 6y ago

It's not an American perspective; it's an economic perspective. The parent comment isn't talking about people's psychological wellbeing, but "how people actually live" (in terms of do they live in poverty or like rich people). Wealth doesn't capture that. For example, you might have someone living in extreme poverty in Guatemala who has no electricity or running water, a small home with a mud floor, and eats mostly rice and beans and similar. If this person has no debt, they might have a very small but positive net worth. Meanwhile, you can have someone from America with negative net wealth living a middle class life. The Guatemalan might be spending the equivalent of $600 per year, while the American might be spending 50x that. Looking at spending better captures who is living in poverty. Wealth can also fail to capture how the wealthy live. Warren Buffett is notoriously frugal. Looking at wealth, you'd find he's about 180,000x wealthier than the mean American adult. Yet he has one house which he bought for $31,500 in 1958, and apparently eats breakfast at McDonald's each morning for no more than $3.17. The vast majority of his wealth will be going to charity. Looking at his spending gives you a more accurate picture of how he lives than looking at his wealth.