Quote:
Originally Posted by Crawford
So I'm sure I'll get pushback, but it's probably true that MS or LA are "richer" than UK or France in terms of buying power.
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Ok, so I've had a look at this with the most recent and authoritative data.
Here is the GDP per capita of France, the UK, Québec, Ontario and British Columbia, compared to US states. It's expressed in PPP US dollars. Not only that, but I've also redressed the Canadian and US figures to take into account the varying costs of living across provinces and states. Cost of living in Mississippi is lower than in California, so 100 dollars in Mississippi will take you much further than 100 dollars in California. For Canada, I've used a synthetic index of prices in each province (this is the best we have to approximate a "provincial PPP" value). For the US, the US Department of Commerce publishes the Regional Price Parities by state every year, so this is a very good way to get the PPP GDP per capita of every state. Both the synthetic price index for Canada and the RPP for the US are for the year 2024.
And here are the results. They may surprise. Québec is above Ontario and British Columbia. The reason for that is because cost of living in Québec is significantly lower than in Ontario and BC (cheaper housing in Québec in particular), so that pushes their PPP GDP above Ontario and BC. These 3 Canadian provinces have a rather low PPP GDP per capita, lower than Canada's PPP GDP per capita, but that's because the national GDP per capita is boosted by oil production in Alberta and other territories.
PPP GDP per capita in 2024 (in PPP US dollars):
- Arkansas: 69,972
- South Carolina: 69,374
- Idaho: 67,524
- West Virginia: 67,314
- Canada: 64,575
- France: 64,054
- UK: 63,072
- Mississippi: 61,667
- Québec: 60,902
- Ontario: 58,735
- British Columbia: 57,699
If we don't adjust for provincial/state prices, then Québec, Ontario, and BC would be above Mississippi, but the cost of living in Mississippi is very low compared to the national US average, so that boosts the PPP GDP of Mississippi a lot (100 dollars in Mississippi will allow you to buy as much stuff as 127 dollars in California, so a 50,000 dollars annual salary in Mississippi is equal in purchasing power to a salary of 63,667 dollars in California).
Now, as has already been explained, GDP per capita is an average, it's not a mean. Income inequality is high in the US, much higher than in the UK, France, and Canada, so obviously the median income in Mississippi is not going to look as good as the GDP per capita.
Moreover, GDP is useful to measure per capital wealth at the level of an entire country, but it's much less relevant at a subnational level. For example, the income of people in Ontario and Québec is going to be higher than what their GDP per capita suggests, because they receive revenues from the oil extracted in Alberta (either directly via stock shares, or indirectly via the federal government spending tax dollars levied in Alberta in the provinces of Ontario and Québec). In the US, financial transfers by the federal government are much lower than in the UK, France, and Canada, so poor states are not going to receive much in terms of financial transfers.
The best data to compare these territories would be median income, but we alas do not have harmonized income data for these 4 countries. It would be like comparing apples and oranges. Moreover, even if we had perfectly comparable, apples-to-apples income figures, it wouldn't tell the whole truth, because countries have different levels of taxation. Disposable incomes in France, for instance, are lower than in the US, because taxation is sky high, but then you get all sorts of government services, like essentially free education and healthcare, whereas in the US people have to use their disposable income to pay these. That's why comparing incomes across national borders is tricky. And that's why GDP per capita is the least bad thing we have for international comparisons, because it shows the entire wealth production in the country, irrespective of how the state will later tax it. But GDP comparisons don't work well for subnational comparisons (GDP per capita in Florida is artificially lowered by the many retirees living there who don't produce anything, Ontario and Québec's GDP per capita doesn't reflect the transfers from Alberta's oil, etc).