The European vacation season isn't over yet. More Americans than ever before are traveling across the Atlantic this year. By the end of August, 787 planes full of passengers will be back, jet lagged but elated, ready to regale friends with tales of their travels. And often giving the impression that Europeans really get it when it comes to quality of life.
There's no doubt that European cities, towns and countryside are pleasant places to visit. But that's not all. Is it a better place to live than the United States? To get an evidence-based answer, the natural starting point is big economic indicators like GDP per capita and disposable income. In that respect, the United States clearly outperforms Europe (we'll focus on EU countries). According to the World Bank, the US's purchasing power-adjusted GDP per capita in 2023 will be $81,695 compared to $60,350 in the EU, more than a third higher than the EU. Disposable income also favors the US.
Of course, it is widely accepted that Americans are, on average, more productive and wealthier than Europeans, but both the US and Europe are sufficiently diverse and vast that generalizations make little sense. Given that the newcomers to the EU are still crawling out of the hole dug by communism, a comparison with wealthier parts of Europe is more appropriate. Moreover, Americans tend to work more for the money they earn. If you're trying to figure out who is better off, it makes sense to take into account the greater amount of leisure time available to Europeans.
Last year, The Economist did this kind of study comparing European countries to the US based on GDP per capita adjusted for purchasing power and hours worked. The analysis found that EU countries Austria, Belgium, Denmark, Luxembourg and Sweden (and outside the EU Norway and Switzerland) outperform the US in GDP per capita when you adjust for those considerations. In other words, these countries have higher individual productivity than the US. But if we're going to separate out Norway's 6 million people, Belgium's 12 million people, etc., why not do the same for US states? The comparison tells a different story.
According to our own methodology, assuming that US workers spend similar hours across the country, we can estimate that the eight US states with the highest wealth per capita – New York, California, Massachusetts, Washington, North Dakota, Alaska, Delaware, and Connecticut (and Washington DC) – generate more wealth on average than the seven European states that economists pay particular attention to. The European group has a population of 50 million, while the US subset combined has a population of over 70 million. Two European countries (Luxembourg and Norway) still generate more wealth per capita than the US states with the highest wealth per capita (except DC), but their combined population is smaller than the population of New York City alone. And no European wants to see such wealth comparisons.
But the quality of life question is about more than who has more money to spend. It's about what you get with your money. Marko Djukic of Bismarck Analysis offered an unconventional rebuttal to the traditional money answer in April. “Europeans aren't poor; they're illiquid,” Djukic argued in X. “Much of Europe's wealth is stored in safe roads, nice parks, public transportation, free health care, and the like, which are ultimately too socially costly for Americans to maintain. Americans take the money instead.” Djukic's post, which was expanded on in a Palladium essay, argues that Europeans aren't poor, that Europeans are investing in public goods and Americans are pocketing the cash.
The more than 40,000 likes the post garnered prove the validity of this argument: there's something satisfying about safe, beautiful shared spaces that you can get to without a car. But Djukic's speculation, while thought-provoking, is flawed: safe roads and transit are public amenities that Americans are relatively inaccessible to, but that's not because Americans are “taking their money instead.”
Take two similarly sized cities, Berlin and Los Angeles. Berlin has a population of about 3.5 million and spends about $2 billion a year on policing. Los Angeles has a similar population but spends $3 billion on policing. New York has a population of over 8 million and a police budget of over $5.5 billion, so it spends more per capita. Berliners live in much safer cities than Los Angeles or New Yorkers, but that's not because Americans are skimping on public safety spending. It's a similar story with transportation, where Americans pay a lot but get little in return. New York's Second Avenue subway extension costs $2.5 billion per mile, 10 times the cost per mile of Paris's amazing Grand Paris Express project.
These examples undermine Djukic's assumptions about causation, but they support his broader claim that life in Europe is better in some ways.In line with this complex picture, the United States ranks right in the middle of the OECD's “life satisfaction” rankings, above other English-speaking countries, France, Italy, Spain and Belgium, but below the Nordic countries, the Netherlands and German-speaking countries.
In sum, the US is richer and happier than almost every country in Europe, but some wealthy European regions compare favorably with the US, though they lack the super-strong economic performance enjoyed by America's most productive metropolises, such as New York, the San Francisco Bay Area, Seattle and Washington, DC.
The ultimate question may be whether America's less stable nature — its much shorter political history, more internal migration, and greater cultural diversity — makes it more economically dynamic and in some ways more dysfunctional, or whether the good can be bottled and the bad discarded.
But the more direct question, especially when asked on a European summer patio, is much easier: Should I drink a Pilsner or a Bordeaux?
Reid Benn is an economic policy analyst at the Manhattan Institute. Jordan McGillis is economics editor at City Journal.
Photo: SalvadorCelis / iStock / Getty Images Plus
