UK Living Standards Rise Above America’s For The First Time In A Century

For the first time in more than 100 years, British living standards have risen above those of the average American on the back of a strong British Pound relative to the U.S. dollar and other factors.  The respected Oxford Economic Consultancy cited rising British incomes, longer vacations, and “free” health care as three major factors contributing to their conclusion that the living standard of the average British citizens is now higher than that of the average American.  The UK’s per capita Gross Domestic Product (GDP) is expected to edge out America’s ever-so-slightly this year, clocking in at $34,493 (£23,500) compared to America’s $34,125 (£23,250).

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GDP Doesn’t Tell The Whole Story

While the numbers above might be shocking for many Americans, it’s important to realize that numbers don’t tell the whole story.  Part of the conclusion comes from subjective judgments that “free” health care and longer vacations leads to a higher standard of living, which may or may not be true (in my opinion it is, but it’s certainly up for debate).  Additionally, the article goes on to note that per capita GDP only takes income into account, not cost of living.  In general, goods and services are significantly cheaper in the U.S. so that while Americans’ incomes may be slightly lower, those incomes still buy significantly more than what the average Brit could afford.  To me, standard of living should be measured by actual purchasing power, not just income.  To give an over-simplified example, if incomes are twice as high in London as in a small U.S. town but London is more than twice as expensive, the small-town citizen still comes out ahead in terms of purchasing power.   Of course, you must also take into account the fact that London has far more cultural and entertainment opportunities than a small rural town is likely to have and it’s probably true that easy access to cheap public transportation and major sporting events contributes significantly to quality of life.

On the flip side, Britain has its share of problems.  In a nation where fuel prices were already extremely high relative to America, the recent rise in oil prices has hit consumers there particularly hard, even in densely-populated cities with good public transportation options.  Additionally, much of Britain’s rise in economic output over the past decade is due to the expansion of London’s financial sector, which has been hit as hard as New York by the global market meltdown.

In conclusion, there is really no objective way to measure “living standards.”  It all comes down to how you prefer to live your life.  One thing is true, though:  our English brethren have higher incomes than we do, at least for now.

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