Tuesday, August 14, 2012
American's Are Better Off Than The Chinese But Not The Dutch
Dani Rodik shows that the income distributions for the US and China do not overlap much. The difference in per capita GDP between the US and China provides an accurate picture of the relative standards of living in the two countries. The income distributions between the US and The Netherlands overlaps a lot. The bottom 50% of the Dutch are better off than the bottom 50% in the US. That pattern is reversed for the top 50%. The top 50% in the US does better than the top 50% in The Netherlands. Therefore, we cannot really tell which country is better off by looking at per Capita GDP which is higher in the US.