Income/Clothes Spend ratio?

[Henry Boogers]

I refuse to calcualate this.

Anyhow, the only fair comparison would be what percent of your disposable income you spend on clothing. The only issue there, of course, is that most of us probably view double discounted RL PL (EG) shoes as necessary expenditures rather than spending of disposable income.

 

[tiger02]

3.8% for 2006 through July 4th.

 

[Briguy]

Last year, 9%. This year, 7 or 8%. If my wife is reading this, only 3% (cough cough).

 

[Duveen]

Originally Posted by Sartorially Challenged

On average, the material quality of living is substantially lower in Europe, even in Western Europe (compared to the U.S.). Europeans have fewer cars, air conditioning and home square footage per capita (the average "poor" person in the U.S. has a larger house than an average person in Europe). In other words, Europeans often lack many things Americans take for granted as being "normal" material possessions. Europeans have lower disposable income and often do not have stocks and/or mutual funds. They often do not have second cars (that is, if they even have a car to begin with) or boats. According to a Swedish study, adjusted for PPP, 40% of, for example, the Swedish population would be considered living below the poverty line IF American standards of "poverty" were applied to Sweden. Simply put, the American poor have material comforts that middle-class Europeans often do not, especially outside affluent Western Europe. The high savings rate in Europe depends to some extent on culture, but also on lack of available credit (inefficient and/or politically-controlled banking system) and comparatively high price of housing per income (one has to save up a LONG time to buy a house), that is to say, by necessity. This was also the case, for example, in South Korea where a very high savings rate persisted... until the credit system was liberalized, leading to the plummeting of the savings rate.
Comments below address Western Europe (the initial 12 EU countries). Adding in Eastern European countries certainly changes the mix - maybe that is where you are getting the impression that Europeans are worse off than US. The Swedish poverty example is a bit of a chestnut - are you talking about average GDP? Looking at average GDP lumps Bill Gates in with Joe Jobless to get at an 'average' that does not account for serious inequality. Like it or loath it, what the European welfare state does is distribute costs across the whole economy and limit the amount that any one individual might actually have. Better indicator is the modal income (most common #, not average #). Also important to factor in/monetize the avoided costs of childcare, healthcare, etc. When looking @ cars - think about better public transit networks, higher costs of gas and cultural factors. Is the absence of a car a major problem to those who don't own them? Or are they rationally trading off these things. Boats are, I suppose, a measure of wealth but again I'd argue culture is different - Europeans may have other baubles (travel? clothes?) to waste their money on and not value boats. Absence of boats does not, to me, equal lower std of living. When looking @ lower 'disposable income', you are looking @ income after taxes. European taxes are higher, therefore disposable income is likely to be lower overall (and you are again dealing with averages - Bill Gates + homeless dude=2 rich guys on average). That said, some of US 'disposable' income is used to buy services from private vendors that the gov't supplies in Europe. House size is a function of population density - lots of McMansions in the heartland are cheap, doesn't mean that European housing stock is worse than American housing stock. Absence of AC is a fact and is one of the things that sucks about Europe, but I'd ask when that became a major index of well-being? My guess on lower levels of AC is -> higher per-unit energy costs in Europe + potentially tighter regulations increasing cost to produce/sin taxese. I am not saying that the European system is ideal or that they are all rolling in it, but I just can't square your picture of a Europe where most individuals are significantly poorer than every outward sign would lead one to believe. http://www.gesis.org/en/social_monit...income.htm#imp

 

[rajesh06]

Originally Posted by Duveen

Better indicator is the mean income (most common #, not average #). Also important to factor in/monetize the avoided costs of childcare, healthcare, etc.


Not to quibble - because I agree with your overall points but:
most common = mode
half above; half below = median
avearge does in fact = mean

 

[Duveen]

Originally Posted by rajesh06

Not to quibble - because I agree with your overall points but:
most common = mode
half above; half below = median
avearge does in fact = mean

Fair point rajesh - long day, and I don't play with economic terms as regularly as I used to...

 

[sygyzy]

If you check the car posts on Superfuture, you realize how some of these kids afford to buy all this expensive streetwear. And yes, $200 jeans and $50 tees are expensive. The answer is, they don't buy anything else. I saw page after page of rediculously ****** cars. I know, a car is a losing investment and you should never buy new and blah blah blah. But who are you fooling when you walk out of a place with your designer shoes, fancy blazer, tailored shirt and cufflinks, and get into your 72 Datsun?

 

[LabelKing]

Unless it's a 1972 Datsun 240, which can be nice.

Vintage cars are so much more a style statement than most anything new. A $500,000 Maybach may not even retain as much as much flamboyance as a $5000 Mercedes-Benz from 1967. I know I'd certainly be much more apt to notice a '60s Mercedes Cabriolet than a new Bentley.

 

[sygyzy]

Originally Posted by LabelKing

Unless it's a 1972 Datsun 240, which can be nice.

Vintage cars are so much more a style statement than most anything new. A $500,000 Maybach may not even retain as much as much flamboyance as a $5000 Mercedes-Benz from 1967. I know I'd certainly be much more apt to notice a '60s Mercedes Cabriolet than a new Bentley.

I was expecting this sort of response. You know what I meant, LabelKing.

Sigh.

 

[LabelKing]

Originally Posted by sygyzy

I was expecting this sort of response. You know what I meant, LabelKing.

Sigh.
Of course. Someone with an $800 Honda is likely a prime example.

 

[Sartorially Challenged]

Comments below address Western Europe (the initial 12 EU countries). Adding in Eastern European countries certainly changes the mix - maybe that is where you are getting the impression that Europeans are worse off than US.

Let me clarify. Europe, as a whole, enjoys a substantially lower level of material quality of living. Counting only EU 12, it is still somewhat lower than that of the U.S.

The Swedish poverty example is a bit of a chestnut - are you talking about average GDP? Looking at average GDP lumps Bill Gates in with Joe Jobless to get at an 'average' that does not account for serious inequality.

GDP per capita ADJUSTED PPP.

Yes, there is greater inequality in the U.S., but the point was that even though the American poor do substantially worse than the American rich, they do rather well compared to the European poor. Which leads me to the following point:

Like it or loath it, what the European welfare state does is distribute costs across the whole economy and limit the amount that any one individual might actually have.

The welfare state does more than that, it also restricts the income gain by the society AS A WHOLE.

It isn't simply that the same pot of money is divided unequally in the U.S. while it is divided more equally in Europe; it is that that system of unequality (greater competition) leads to greater income gain as a whole, compared to less competitive systems. As I said before, the American poor have material quality of living similar to (in some cases exceed) that of the European middle class.

Now, there is a potentially legitimate argument that whatever the absolute gain, the lower relative gain (that is, relative to the rich of their own society) in a competitive society may lead to more resentment by the poor, thus leading to social disharmony. That is a debatable sociological phenomenon, but economically the verdict is clear.

and you are again dealing with averages - Bill Gates + homeless dude=2 rich guys on average).

And yet, the American middle class is very rich compared to the European middle class. Few European middle class families have three cars, a boat, multiple computers and 3,000 sq. ft. house.

That said, some of US 'disposable' income is used to buy services from private vendors that the gov't supplies in Europe.

Which results in competition for the said services, leading to superior product and lower prices.

House size is a function of population density - lots of McMansions in the heartland are cheap, doesn't mean that European housing stock is worse than American housing stock.

If population density is inversely proportional to housing size, then Russians in Siberia must have the biggest homes!

Americans can afford to buy large homes, because the U.S. credit system is exceptionally efficient (and less regulated) than in Europe or East Asia. When people can't borrow money easily, they have to, by necessity, save a long time, to buy a house, as in fact occurs in Europe and East Asia. When that system becomes more liberalized and efficient, savings rate goes down (as occurred in S. Korea, traditionally a very high savings rate country that experienced a drastic decline in savings ever since house loans and credit cards became widely available).

Absence of AC is a fact and is one of the things that sucks about Europe, but I'd ask when that became a major index of well-being?

While my personal well-being factors in presence or absence of A/C, I was not making any argument about "well-being," but material quality of living. A/C, like cars, house size, etc. is a quantitative measure of material quality of living.

It is also something intended to demonstrate to other Americans that what we take for granted ("Surely everyone must have A/C in this day and age") is not something universally possessed in the world, even in developed Europe.

Now, none of this is a argument against the view that Europeans, particularly older ones, are often discerning purchasers of textiles, including clothes. We Americans have emphasized high quantity and low prices, often leaving quality behind. But our pernicious (

) influence has taken its toll and European purchasing habits (particularly by the young) are converging with ours.

 

[Sartorially Challenged]

A $500,000 Maybach may not even retain as much as much flamboyance as a $5000 Mercedes-Benz from 1967.

I might point out also that that $5,000 1967 Benz is not as safe as a pricier, newer car, that has all the post-modern safety features.

Car accident death rates have fallen dramatically, and one strong factor has been the increasing quality of safety features as "standard" options.

 

[tiger02]

Let me guess, you just graduated with a degree in econ? Your argument gets the book answer exactly right.

Originally Posted by Sartorially Challenged

the American middle class is very rich compared to the European middle class. Few European middle class families have three cars, a boat, multiple computers and 3,000 sq. ft. house.

Your indicators are off. Few American families take month-or-longer vacations outside the country. European families, on average, do so every year.

There are arguments to be made against the European social welfare system, but you've cast your net a bit too wide, and entirely missed the point that











(wait for it)










money is not an end unto itself.

 

[Duveen]

SC, I think that we may have to agree to disagree and/or take this to a PM discussion. I still wonder about the benchmarks that you are using (the recurring Boat Index of Wellbeing is an example) and am guessing that we won't end up convincing each other in any case. You make a number of assertions that I am a bit unsure of:

Originally Posted by Sartorially Challenged

'American poor do better than European poor'
By what benchmark? Again, are you looking at income data alone and not counting in other benefits? Are you looking at rates of hunger and homelessness?

Originally Posted by Sartorially Challenged

'[Fact that private sector supplies things in US that are supplied by gov't in Europe] Which results in competition for the said services, leading to superior product and lower prices.'
Examples like healthcare would put the lie to this - US pays more per capita for HC than almost any other country, and our clinical outcomes are not better than, and often worse than, those overseas. The market is great at allowing choice for elective and high-end surgical procedures (arguably 'superior') but is certainly not cheaper. Prices for childcare in the US are extremely high - again, maybe 'superior service', but certainly not lower-priced. This matters because if you are using income as a metric of std of living, you have to account for where that money goes in the US that it doesn't need to go in Europe.

Originally Posted by Sartorially Challenged

'And yet, the American middle class is very rich compared to the European middle class. Few European middle class families have three cars, a boat, multiple computers and 3,000 sq. ft. house.
I'd argue that most American 'middle class' families don't have "three cars, a boat, multiple computers and 3,000 sq. ft. house." Something like 75% of Americans, from the poor to the fairly wealthy (40-400K annual earnings) call themselves 'middle class'. This is a linguistic fig leaf, not an economic fact. http://en.wikipedia.org/wiki/Middle_...e_middle_class And while you tweaked me on the cost-of-land relationship I proposed as an explanation for the McMansion phenomenon you are using as a benchmark of well-being, I stand by the core point -- if a 3000 sq. ft. house is available at all to the 'middle class', it is because land is a lot cheaper here than overseas. If there aren't a ton of big houses in Siberia, my guess would be that is because: (i) there ain't much to do there - less demand for large housing; (ii) heating costs are high. Unlike Siberia, the US and the EU12 occupy a similar latitude, but Europe has higher population density. There just isn't space for 3,000 sqft houses unless other dwellings are displaced, which adds greatly to cost.

Originally Posted by Sartorially Challenged

The welfare state does more than that, it also restricts the income gain by the society AS A WHOLE.
This statement covers causality (Europe has lower growth b/c of the welfare state), which I doubt has been established, as well as the assumption that std calculations of growth are accurate. To the latter point - there has been some fairly solid analysis showing that the US has more natural resources than Europe and is depleting them to fuel current growth - which is fine and good, but not sustainable (you are arguing that the system itself is the source of this growth - if that were so, you'd want to see an apples-to-apples comparison where US growth was much stronger after adjusting for resource depletion). When that difference is factored out, EU12 and US growth rates aren't nearly as far apart. And neither set of economies is showing the sort of growth that we see in developing countries.

 

[LA Guy]

Originally Posted by Spencer Young

I have a question about the European styling. In my visits, I've noticed that Europeans tend to dress both better and more expensively. If European countries have a lower GDP per capita, their citizens spend *more* on clothing, and presumably they have a higher savings rate than the US, what is being crowded out? I tried asking my friend who's been studying in Paris this question, but she said something like "well healthcare is free or cheap" (completely disregarding the whole taxation issue). It sounds like Europeans must be giving something up in order to afford their clothing, but what is it? Cars?

College tuition is next to nil. A sizable number of people, and young people in particular, do not own vehicles. Europeans also tend to live at home for a longer period of time (often well into their late 20's, though this is not the norm. Living at home through college is very common, however.) Travel within Europe is also significantly cheaper.

IIRC, the average European spends ~14% of income on clothing and accesories, as opposed to the average 7% in the United States.