Are people of Nordic Nations "happier, healthier" with "a higher standard of living overall than Americans"?

Question

Ernest W. Adams wrote in the answer to the question "Why are people so negative about Nordic nations, especially Sweden?":

There are a lot of right wing Americans who have been preaching for the last 70 years that the welfare state can’t work, it's unfair, it's oppressive, and so on.

It irritates these people very greatly that the Nordic nations have made a thundering success of the welfare state. Their people are happier, healthier, and have a higher standard of living overall than Americans do, especially those at the bottom of the economic scale.

I have searched for the term online but didn't find any helpful links.

Answer 1

These statements are absolutely supported by studies.

In the World Happiness Report ranks countries according to various life measures. It is by far the most widely used and widely reported measure of happiness. The US ranks 13th in 2016. All Nordic countries (Denmark, Norway, Finland, Sweden and Iceland) ranked above it.

In the Health life expectancy subcategory of that report, the US ranks 33rd in 2016. All Nordic countries (Denmark, Norway, Finland, Sweden and Iceland) ranked above it.

In the Freedom to make life choices subcategory of that report, the US ranks 43rd in 2016. Denmark, Norway, Finland and Sweden all ranked in the top ten, and Iceland above the US.

In measures of life expectancy by country from the WHO, the US ranked 31st in 2015. All Nordic countries (Denmark, Norway, Finland, Sweden and Iceland) ranked above it.

I have assumed that in the question 'standard of living' was not intended to be a purely financial measure. Other similar claims usually refer to 'quality of life' or something similar. The US generally leads in purely financial measures. However even then, there are some reputable surveys (not most), like this one of median per capita income that place most of the Nordic countries (i.e. Denmark, Sweden, Finland, Norway) above the US.

Answer 2

DJClayworth's answer is right, but I would like to add on one remark in the question that that answer didn't address: "especially those at the bottom of the economic scale".

As DJClayworth's argued, mean standards are higher in Nordic countries than in the USA, but situation in those countries is not just better than in the USA: it's also less unequal - you can see in Wikipedia's list of countries by income equality that Nordic countries consistently rank better than the USA. The list of countries by inequality-adjusted HDI leads to the same conclusion.

Therefore, the people at the bottom of the economic scale in the Nordic countries benefit both from living in a country with higher mean standards and from living in a country with less inequality, allowing them to enjoy life standards closer to those higher mean standards.

Answer 3

First, it's important to note that there are three claims being made here:

• People in Nordic countries are happier than people in the United States.

• People in Nordic countries are healthier than people in the United States.

• People in Nordic countries have an overall higher standard of living than people in the United States.

Other answers have already addressed the first two of these to some extent. My answer will focus (for now, at least) on the last claim regarding standard of living.

tl;dr:

The claim regarding overall standard of living is false. The U.S. exceeds most Nordic countries in many common measures of standard of living. The exception is Norway, which has a higher GDP/capita, but lower median household disposable income.

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What is Standard of Living?

First, let's define the concept of standard of living.

Wikipedia defines Standard of Living as:

Standard of living refers to the level of wealth, comfort, material goods and necessities available to a certain socioeconomic class in a certain geographic area.

Investopedia defines it as:

A standard of living is the level of wealth, comfort, material goods and necessities available to a certain socioeconomic class or a certain geographic area.

Merriam-Webster's Dictionary defines it as:

1. the necessities, comforts, and luxuries enjoyed or aspired to by an individual or group

Google defines it as:

the degree of wealth and material comfort available to a person or community.

Investopedia (and Wiki, which cites it) uses more precise economic jargon due to a target audience consisting primarily of investors. On the other hand, M-W and Google use more concise, layman-focused language. However, all of them say effectively the same thing: the standard of living of an individual or group is defined in terms of the level of goods and services available to them.

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It's also important to note here what standard of living is not. As stated in the Wikipedia article on Quality of Life,

Quality of life should not be confused with the concept of standard of living, which is based primarily on income.

Standard of living is an economic concept, not an emotional one. Other life satisfaction factors that are taken into account when measuring Quality of Life are irrelevant to measuring standard of living.

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Measures

Since income is usually the best predictor of the level of goods and services available to the vast majority of people, most measures of standard of living focus on measuring income available to the demographic in question.

According to the article How Do We Measure "Standard of Living?" posted by the Boston branch of the United States Federal Reserve System (a.k.a. "the Fed") and quoting a Canadian study on standard of living:

Standard of living is best measured through real GDP per capita as it encompasses all earnings accruing to residents of a country.

So, let's look at that first.

GDP per capita (PPP-adjusted)

According to Investopedia:

Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country's borders in a specific time period.

However, cost of living can vary dramatically between different places, so an adjustment called Purchasing Power Parity is typically used when comparing GDP and income numbers between different places in order to normalize the numbers to what a given GDP or income can purchase. In order to account for these differences, all data used here will be PPP-adjusted where available.

Additionally, as described in the Wikipedia section on the relationship between GDP and standard of living, while GDP per capita is often used as a measure of standard of living due to its frequent, wide, and consistent availability, the relationship between GDP/capita and standard of living does have some important pitfalls to watch out for.

• It does not include non-market activity (e.g. volunteer or unpaid work) or non-monetary exchanges (i.e. bartering.) This can especially be a factor when making comparisons to less-developed economies where bartering often represents a larger fraction of the economy. However, this also means that productivity within a household (e.g. growing food instead of buying it or preparing your own meals instead of eating out) is not counted. As a result, countries with more production within households can be somewhat under-represented by GDP/capita.
• More importantly to our consideration here, it also does not account for how the gross product is distributed due to using an overall average. As a result, goods and services not distributed to households and income inequality between households can cause GDP/capita figures to over-represent what is actually available to a median household. Other measures which do not suffer from this weakness will be presented later.

The International Monetary Fund (IMF,) World Bank, and U.S. Central Intelligence Agency (CIA) all have estimates for PPP-adjusted GDP/capita of most of the world's nations.

Norway, like other oil-rich countries such as Qatar (#1), Kuwait (#6), and UAE (#9), ranks above the U.S. All other Nordic countries rank well below the U.S. in all three lists.

Here are the rankings of the Nordic countries and the U.S. by all three agencies (Source: Wikipedia list):

IMF

• Norway #8 ($69,296)
• United States #13 ($57,294)
• Sweden #17 ($49,678)
• Iceland #20 ($48,070)
• Denmark #23 ($46,603)
• Finland #29 ($41,813)

World Bank

• Norway #8 ($61,197)
• United States #10 ($56,116)
• Sweden #15 ($46,704)
• Denmark #16 ($46,624)
• Iceland #18 ($46,547)
• Finland #23 (40,979)

U.S. Central Intelligence Agency

• Norway #8 ($68,400)
• United States #13 ($56,300)
• Sweden #18 ($48,000)
• Iceland #22 ($46,600)
• Denmark #25 ($45,800)
• Finland #28 ($41,200)

Household Income (PPP)

PPP-adjusted mean and median household income are also good, objective measures for standard of living.

Median household income and median household disposable income are especially useful in terms of the middle-class, as they are not skewed by high numbers on the upper end and they directly measure the standard of living of a median (50th percentile) household. This is in contrast to mean household income (an overall average of household income) or GDP/capita figures, which, as previously discussed, can be skewed by unequal income distribution.

Gallup Polling released a poll-based median household income list in 2013 based on data collected from 2006 to 2012. This poll listed Norway, Sweden, and Denmark ahead of the U.S. and Finland behind it. Iceland was not listed. However, being a poll, these figures are based on self-reporting of a poll sample rather than more direct and comprehensive measures, such as those performed by the governments.

The figure given for the U.S. in the Gallup survey varies dramatically from the figures measured directly and comprehensively by the U.S. Census. The figures given by the U.S. Census (PDF, Figure 1, p. 5) would rank #1 on Gallup's list. Figures given by the Bureau of Economic Analysis (PDF, Table 3, p. 33) are also in line with those given by the Census. However, it's possible (and probable) that the data for other countries on the list was also underreported, so valid conclusions can't really be made on proper ranking from this data. Unfortunately, I'm not able to find a reliable data source for the Nordic countries for this measure at present.

Median Household Disposable Income (PPP)

The Organisation for Economic Co-operation and Development (OECD) measures disposable income available to households.

Since it measures good and services actually available to households, according to OECD:

Disposable income, as a concept, is closer to the idea of income as generally understood in economics, than is either national income or gross domestic product (GDP).

In order to maintain a neutral measure that treats equally systems which fund such things as healthcare and education in different manners (such as the government and non-profit charities,) OECD adjusts these data to include as income money spent by the government or "non-profit institutions serving households" as household income. Additionally, funds received from negative taxes (yes, this happens,) retirement fund payouts, social security programs, etc. are added in as income. A full description of their definition is given at the linked source.

Here is their list for 2014 data on PPP-adjusted disposable household income by country:

• United States #1 ($44,818)
• Norway #4 ($36,138)
• Sweden #10 ($30,492)
• Finland #11 ($30,456)
• Denmark #15 ($27,158)
• Iceland #17 ($25,882)

The rankings here are out of the 34 countries whose data are tracked by OECD for this measure. These consist of most European and North American nations, South Korea, South Africa, Australia, New Zealand, and Chile.

Conclusion

Most direct measures of standard of living place the U.S. above most or all Nordic nations. Some place Norway ahead of the U.S.

The claim that all Nordic nations have a higher overall standard of living than the U.S. is not supported by the data.

Answer 4

Since it may be subjective which indicators to use for comparing what constitutes a good life, the The Organisation for Economic Co-operation and Development has published the OECD Better Life Index

http://www.oecdbetterlifeindex.org/#/11111115551

The Better life index makes it easy to compare the Nordic countries with the US. Variables: Housing, Income, Jobs, Community, Education, Environment, Civic Engagement, Health, Life Satisfactio, Safety, Work-Life Balance

Life satisfaction: Ranking: 1. Norway, 2. Swizerland, 3. Denmark, 4. Iceland, 5. Finland, 10. Sweden, 15. USA http://www.oecdbetterlifeindex.org/topics/life-satisfaction/

Answer 5

Strategically, the question mixes up two issues:

1. Factual - are people in Nordic nations "happier, healthier, with higher standard of living", mostly in statistical sense

2. Causative - what are the causes behind whatever factual state found?

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• Happiness aspect in culture

Facts:

Happiness is evaluated in surveys. It's also highly subjective and dependent on cultural notions:

Asking people “Are you happy?” means different things in different cultures. In Japan, for instance, answering “Yes” seems like boasting, Booth points out. Whereas in Denmark, it’s considered “shameful to be unhappy,” newspaper editor Anne Knudsen says in the book.

Source: http://nypost.com/2015/01/11/sorry-liberals-scandinavian-countries-arent-utopias/

Causation/correlation issues:

The reported happiness does not have to correlate with what most people think as objective or factual aspects of happiness:

Denmark suffers from high rates of alcoholism. In its use of antidepressants it ranks fourth in the world. (Its fellow Nordics the Icelanders are in front by a wide margin.)

Source: http://nypost.com/2015/01/11/sorry-liberals-scandinavian-countries-arent-utopias/

• Happiness aspect in genetics/biology

Facts:

Here's a peer reviewed article showing that a correlation exists between happiness and genetic distance from Denmark, and found hints of causation (emphasis mine):

This study has used three kinds of evidence to try to offer a solution to one of the famous puzzles of modern social science. For decades, a much-replicated international pattern of happiness and well-being has remained largely unexplained.
This paper has demonstrated that the cross-country happiness pattern is correlated with genetic differences. [...]

We find that the closer a nation is to the genetic makeup of Denmark then the happier is that country. As a raw uncorrected social-science correlation, such a result would not be a persuasive one. However, what is more interesting is that the correlation survives adjustment in the regression equations for many confounding variables. [...]

Our results nonetheless should be treated cautiously.

National Happiness and Genetic Distance: A Cautious Exploration. Eugenio Proto, Andrew J. Oswald

It should be noted that the effect survives even when authors control for important variables:

Since in this paper we hope to isolate the effect of the genes, in these later calculations we control for religion, income, work status, age, and gender.

Causation/correlation issues:

The correlation between Nordic welfare state and reported happiness does not have to be causation.

• Standard of living

Facts:

In purely material terms, Nordic countries lag behind USA:

Diagram 2:5. Per capita GDP in the states of the USA and in the EU 15 in 2001, PPP-adjusted, index EU 15 = 100. I have rotated it 90 degrees clockwise to make it more readable and marked Nordic countries in the chart.

Source: http://www.timbro.se/bokhandel/pdf/9175665646.pdf

It's important to note that the chart above uses data adjusted for purchasing power parity, not raw GDP per capita.

Obviously, this does not account for other factors impacting standard of living, such as crime.

Causation/correlation issues:

Untangling correlations and causes between welfare state and material standard of living (and back) is an unobvious task that involves understanding impact of factors such as: rule of law, culture, population IQ (see http://www.lagriffedulion.f2s.com/sft2.htm ), population size (Sweden's population is 8 million people, Norway's population is 4 million for instance), taxation, political system, economic system and probably many other factors. Simple causation implied by E. Adams that welfare state simply results in higher standard of living in Nordic countries ignores all those factors and therefore it is unwarranted.

Answer 6

Regarding standards of living

Although the United States, at purchasing power parity, does have a higher median household income than any Nordic country, that income is much more unevenly distributed.

As a measure of inequality, the Gini coeffecient is the most commonly used. Going by OECD numbers from 2014, the United States (at 0.394, compared to the OECD average of 0.318) has the third highest income inequality of any OECD country. The only OECD countries where income is less evenly distributed are Mexico and Chile. By comparison, the Nordic countries of Iceland, Norway, Denmark, Finland and Sweden have an average Gini coeffecient of 0.258.

Looking at relative income poverty (percentage of households earning less than 50% of the country's median income) paints the same picture. In the United States, this is a staggering 17.5 percent of households, the next highest of any OECD country behind Israel. The five Nordic countries average 6.8 percent.

Standards of living, as defined by Investopedia, can be compared between geographic areas or indeed between socioeconomical classes. When broken down into their constituent socieconomic classes, you get vastly different results when comparing the US to the Nordic countries depending on whether you are interested in the living standards of the poor, of the wealthy or of the middle classes. At least this is true as far as household income is concerned.

Technically, this means that the statement regarding any overall higher standard of living cannot be true. However, for the poor, it most certainly is -- when going by household income as the sole metric.