– Mississippi has similar GDP per capita ($53061) than Germany ($54291) and the UK ($51075), so why are people in Mississippi so much poorer with a much lower living standard?

Question

I was surprised to learn that poor states like Mississippi have about the same gdp per capita as rich developed countries. How can this be true? Why is there such a different standard of living?

In: Economics

Answer 1

Because your picture of places like Germany is based on what English speaking Germans on the internet post. Your average English speaking Germany comes from a wealthy family, is highly educated, has a high income job, and also hates America.

Those Germans are not representative of the lifestyle that an average German lives; rather, they are representative of the lifestyle of a modern day German aristocrat. To further complicate things, they often present a distorted picture of their own lifestyle because they are ideologically invested in making Germany look good. A good example of this is “free” education in Germany.

Internet Germans will tell you that their education system is better than the education system in the US because “college” is “free” in Germany. The problem with this comparison is that what Germany calls “college” is considered to be community college in the US and what Germany considers to be “free” is really just low cost tuition, which every US community college has as well. What Americans consider to be college is called “university” in Germany, and the cost of attending university in Germany is comparable to the cost of a state college in the US.

Schools like UCLA, UC Berkeley, Stanford, Harvard, Yale, or MIT – where the school itself has world leading programs in virtually every discipline – don’t really have an equivalent in Germany.

Then going back to Mississippi – your perception of how the average person in Mississippi lives is largely based on tropes that are ubiquitous in modern media, rather than how people in Mississippi actually live.

There is also a misperception that people have that rural = poor and urban = rich. That’s simply not true. Many people living in cities are extremely poor, even if the 19th century building that they’re living in looks pretty. Conversely, many people living in rural areas are not poor, even if the old house they’re living in looks basic and outdated.

All of which is not to say that there aren’t poor areas in Mississippi or rich areas in Germany, but the standard of living of an average person is Mississippi is roughly equal to the average person in Germany. The same is true of any other comparison between a poor US state and a “high income” country that isn’t the US.