I found the perfect example to explain the difference between “GDP per capita” and “GDP per capita, PPP”.
Denmark vs Germany
We all know that Denmark has some of the highest salaries in the EU. But, as everybody who ever been there will be able to tell you, living there is also really expensive.
Within the EU: Luxembourg, Denmark and Ireland have some of the highest salaries. But what does that actually buy you? This is what PPP (Purchasing Power Parity) tries to answer.
But first, let me go one step back and quickly point out the obvious. Comparing the GDP (Gross Domestic Product) as a total over nations, especially with very different population numbers, isn’t going to be that useful in most of the cases. data source
The obvious solution is “GDP per Capita”, where one simply divide the GDP of a nation by the amount of people living there. This gives a very different picture indeed. data source
That doesn’t necessarily translates directly to salaries, but gives a very good example of what people there earn. It also does not say anything about how well that wealth is distribute between poor and rich, this is another topic for another day.
But have a look how far apart Denmark with a GDP per capita of $56k is from Germany with $44k.
But Denmark isn’t part of the EuroZone and, as mentioned, living there is noticeably more expensive.
What purchasing power parity does, is to look at how expensive some products are compared in $ USD to find out how much that money actually buys you. So what do you think, Germans or the Danish, who will get more for their salary? data source
Despite a 20% difference in salary, Germany and Denmark are almost identical.
So if you want to save a lot of money, Luxembourg and Ireland look a lot more attractive.
Money isn’t everything.
Despite that, Denmark and Germany usually ranks as one of the best places to live in the world. Typically ahead of both Luxembourg and Ireland.
If the accumulation of money is more important to you than the quality of life, you need to look at how much the cost of living is and not just the size of your pay-cheque.
Happiness isn’t about money or how expensive life is. It is a question of what you get for it. Not enough will guarantee misery, true. But after a certain threshold other factors start to become more important. Things like personal safety, a clean environment and being surrounded by other happy people is much more important than how big the balance on your current account is at the end of the month.
The US has a smaller population, so GDP PPP is noticeably higher. China is the opposite. What is worth mentioning is that this doesn’t give any indication how the wealth is distributed among the population. Rich US citizens are a lot richer than in the EU, but how about the average citizen?
Debt in % of GDP:
How much does each block pay for healthcare in % of GDP:
Interesting that US citizens, with the worst healthcare plan, pay the most.
A clear winner, or looser here. Positive side node, the EU actually managed to reduce CO2 emissions in the last 20 years. Just. Because what the graph doesn’t show is that they increased again after 2012, and are almost back to where they were.
Despite the light rain, French President Emmanuel Macron and German
Chancellor Angela Merkel held a moving ceremony in Compiegne, northeast
of Paris, to mark the 100th anniversary of the signing of the World War
Powerful show of unity from Merkel, Macron to mark centenary of the end of WWI
German Chancellor Angela Merkel met with French President Emmanuel
Macron on Saturday in Compiegne, the northern French city where an
armistice was signed to bring an end to the First World War.
The EU’s Copernicus emergency satellite mapping service has been activated on the request of the US Federal Emergency Management Agency to support the US authorities face Hurricane Michael. Maps will be provided for Florida, Alabama and Georgia. Commissioner for Humanitarian Aid and Crisis Management Christos Stylianides said: “Our Emergency Response Coordination Centre is monitoring the situation 24/7. We are helping our American friends face yet another threatening hurricane. Our thoughts are with all the people who are in the path of this powerful storm. The EU stands ready to provide further assistance”. This is the second time this year Copernicus has been activated for hurricanes in the US. Photos of the Emergency Centre are available, as well as a video of the EU’s Copernicusprogramme and a factsheet on the EU’s emergency centre.
EU always answer a call for help! Lets us know how we can help.