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
OP, the important term you use here is *per capita*. The US has the largest number of billionaires, by a large margin. And the largest number of millionaires by a **HUGE** margin. They’re in every state, including Mississippi and Arkansas. But all this wealth in America skews the *averages.*
Europe, particularly Northern Europe, has a very large number of citizens who live fairly well and would be considered mostly middle-class in the US, some even upper-middle class. But there are far fewer “rich” citizens than the US. The US has a significant middle class, a very large upper-middle class, a very large lower-middle class, and a significant “poor” population. Mississippi’s poverty is not at a per capita *Africa*-level, but significantly poorer than the poorest citizens in Germany.
All this is to say there is much more wealth in the US than Europe. This makes the average (per capita) higher, even though the wealth is not distributed as evenly as in Europe.
Why does wealth inequality exist? Ask the people with all the wealth.
Is it your perception that Mississippi has lower living standard than said countries, or you have experiences living in all these places.
Everyone here is going completely in the wrong direction, incoming inequality is not a major factor in why Mississippi is poorer than Germany of the UK. The question OP asked is leading people in the wrong direction because it works on the assumption that GDP per capita translates to personal incomes. It does not.
Mississippi has a median income of $28,732. Germany has a median income of $53,666 and the UK has a medium income of $45,819.
Mississippi is poorer because the people there make WAY less money. Why that’s the case is a much bigger (but different) topic.
Why is no one talking about exchange rates? The US dollar is valued much higher than it should be, so when you look at GDP in nominal terms, things get distorted. Economists look instead at GDP per capita at *purchasing power parity*, which accounts for weird exchange rates. Germany’s GDP per capita at PPP is $69,115, and UK’s is $58,906.
Germany and the UK are also highly secular countries, with much more focus on education and science. Mississippi is intensely religious and anti science (on average, based on their actions and votes) and this has a detrimental effect on progress.
A better indicator would be something like [disposable income](https://en.m.wikipedia.org/wiki/Disposable_household_and_per_capita_income#Mean) on a PPP adjusted basis after adjusting for social transfers in kind.
This has the benefit of adjusting for cost of living and for things like universal healthcare, childcare, education, etc. that Europeans tend to benefit from through tax spend, but Americans do not.
The results are pretty similar, though. Mississippi is simply not as poor as you seem to think.
A huge factor is existing wealth
The same income goes dramatically further when you aren’t paying rent and don’t have a car payment
Yes the average production in ms is high, but it just goes to rent
GDP per capita just measures the size and strength of an economy. It does not take into account things like educational obtainment, or crime, or life expectancy, etc. Higher GDP tends to correlate with higher quality of life but not perfectly. If you’re looking to compare, the most commonly used measure of quality of life is HDI.
Because why shouldn’t a few people have most of the money? They are better than us in every way. I can’t wait till they get their 10th mansion!
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