Having lived in Denmark for a little over 5 years, of course I'm glad to hear reports of Denmark being the happiest country in the world. Sometimes I wonder, though, what units of measure did they use to calibrate their happy-o-meter? I'd like to verify the readings for myself.
Of course it's hard to objectively quantify the general happiness level of an entire population on an accurate scale, especially if the majority of that population has been systematically fed the metaphorical equivalent of cheese snacks all their lives and taught to pity those poor souls suffering through surf and turf at the next table over. But the cost of living is a good place to start, as it gives a rough idea of the relative level of comfort people can afford for their money. However, people sometimes seem to overlook the compounding effect of little things like taxes, which may affect what people can afford for their efforts. To get a more accurate idea of the cost of living, tax also has to be factored in, along with a few other items, when calculating the true or gross cost of goods and services.
Just to give Denmark the benefit of the doubt, let's compare this self-acclaimed utopia of a social democracy with that country everyone loves to hate these days, the oppressive capitalist imperialist US of A.
First, the prices:
Neglecting for the moment that items some people consider important for their well-being, such as sunshine or palatable food, are either in short supply or extremely pricey in Denmark, let's take something basic like milk. Since Denmark is a big farm country exporting its dairy products worldwide, this should be more than equitable. We'll also exclude for now any potentially unfair comparison of luxury items like fresh meat or consumer electronics, as well as obvious outliers such as cars or extrusion-molded plastic garden furniture, since the prices of these items in Denmark are simply too mind-bending to be statistically relevant. Apologies to Nassim Nicholas Taleb, and more on these unnecessary extravagancies later. Nor will we consider anything exotic like fresh orange juice, since it's not available in Denmark anyway, and would have to be imported at great expense from Italy, some 500 miles to the south, while it's a domestic product in the US and can be cheaply shipped only 1500 miles or so from California or Florida on a same-day basis.
So the current price of milk in the US ranges from about $3 to $4.50 a gallon, while in Denmark the price is 6.85 crowns per liter. That's $5.12 per gallon. I just paid 8 crowns for a liter of light milk, or $5.98 a gallon, at the local grocery store, but whatever.
Now for the tax:
Denmark's 25% sales tax is included in these figures, so in this case we'll just consider income tax. For an income of about $100k in the US, federal tax is about 18%, and the average state tax is about 10% and social security 6%, for a total of 34%. In Denmark, the cumulative progressive tax on this income is a little over 50%. With social security at 9% and unemployment insurance 8%, this makes the total 67% (social security does not count toward the 59% tax ceiling). This gives our greedy capitalist a take-home pay of $66,000, while our happy Dane is content to accept just half that amount.
Don't forget the benefits!
But wait, what about all those free social benefits like health care? After all, everybody knows Denmark has the best health care in the world, right? Right! Just for example, according to the first worldwide study ever published (The Lancet Oncology 2008, Vol. 9, pp. 730-756), cancer survival rates in Denmark are indeed off the charts. Women fare pretty well, with a 5-year breast cancer survival rate of 74%, compared with only 84% in the US. And hey guys, great news! Your chances of surviving diagnosed prostate cancer are 38% in Denmark! Compare the US with only a lousy 92%. Of course that's only for the cases they diagnose – ask the average Dane if they know what screening is, or if they've had it. Best of all, it's free!
(It would be interesting to see if there is any correlation between that survival percentage and the percentage of Danes (27%) who carry a private health insurance policy in addition to the wonderful free health insurance.)
So to be really impartial, let's toss in $1000 a month for a pricey Blue Cross/Blue Shield package for a family of four, bringing our net US income down by another 12% for a total of 46% tax and other fixed expenses. Much cheaper is possible, and more and more Danes are shelling out for private insurance as well, but let's not be biased about this; happiness has its price*.
Results:
Anyway, what did that gallon of milk really cost in gross income, assuming you're still alive to drink it? Just in case we missed any more of those wonderful free benefits*, let's give Denmark the full benefit of the doubt and compare the average DK price of $5.07 with the high US price of $4.50, although with coupons it's probably closer to $2.75. Recall that we calculated our US resident is shelling out 46% in taxes and expenditures, while in Denmark the lump sum worked out to 67%.
In the US: $4.50/(1-.46) = $8.33.
In Denmark: $5.12/(1-.67) = $15.52.
So as a very conservative estimate, we can conclude that the price of milk in terms of gross income in Denmark is roughly twice that in the US. A more realistic factor is probably closer to 3½, or 5 if you cut coupons and get on a good health plan.
The interesting thing is, the result of this price comparison actually confirms the validity of our above exclusion of things like fresh meat or consumer electronics from our Danish shopping list, since you can't afford them anyway after you've paid for your milk. By the above calculation, a Nintendo DS Lite costs over three times as much in gross income in Denmark as in the US. A new Toyota Corolla with Danish plates will set you back over four times as much (2/3 of the net price is in the plates, by the way), while it'll cost you more than twice as much to fill it up – yes, gas prices really are skyrocketing in the US these days. This also helps to explain why Danes really are the happiest population in the world, because they are wholly untroubled by such materialistic issues, in addition to being spared the stress of having to schedule regular medical checkups or screenings.
*We could go through this same exercise for the wonderful free education everyone in Denmark gets – since both parents have to work to pay for all those free benefits, children are packed off to free day care starting at the healthy age of 6 months. This free day care costs the parents only $500-600/month, while the government picks up the remaining $1500-1800/month in this highly efficient society. Here they are lovingly protected from such capitalistic evils as music and the alphabet until they start free school at age 7. In school, the absence of testing or grades as well as any special programs (besides general derision) for those exhibiting signs of advancement ensures that everyone is equally well-adjusted, with no one with special aptitudes or even interest to spoil the harmony. With all of this free education, Danes are flocking to school, with 80% finishing high school and 26% receiving higher education. Compare this with the US, with only 85% of the population receiving a high school diploma and a meager 27% able to afford a college or graduate degree. To make matters worse, half of these US grads have been forced to accept some form of financial aid.
Surprisingly, an increasing number of Danes appear to be dissatisfied with all of these free benefits, and are turning to private alternatives even though they are still paying for the free ones through taxes. According to Danish Finance Minister Mogens Lykketoft, the current Danish government has "been very successful at pushing more people to private kindergartens, private hospitals, private old-age care, in a fiscal context of limited public resources" – that's Bureaucratese for "you don't necessarily get what you pay for".
Further reading/listening:
Denmark sucks by nsk123
Why Denmark sucks by Peter Bjørn Perlsø
1 comment:
Hi, I just got the offer to move to Denmark and started looking for ways to compare the US to Denmark and your post came up on Google.
I like your comparison, it does provide some insight into the monetary side of making the decision. I don't think that was the unit used in the survey that named the Danes the happiest people on Earth, but it is quite important in making the decision to move there. At this point I should probably mention that I am Danish and moved from Denmark to the US several years ago.
I am not going to comment on your comparison, I think it is dead on, but I do want to add a couple of points that I think you are missing, and that are important to me when thinking about where to live.
You mention a lot of statistics about the health care system, and I don't doubt them, but you left out a statistic that is probably crucial in making the Danes happy: The percentage of insured people. In the US the health care works well for those with insurance, but because you either have to pay for it yourself, if it is not tied to your employer, a lot of people don't have insurance at all. In Denmark, even if the system doesn't always provide the best care, at least everybody gets care. I believe that not having to worry about getting sick and having to go to the hospital is a BIG part of being happier.
The other point I think you're missing is also about not worrying. In Denmark there is a "safety net" that catches people if they lose their jobs. This doesn't mean that there is no worry, but I think it does mean that people worry a lot less about it.
I don't know yet, if these two points are enough to give up the freedoms that I do have here in the states, but they certainly are part of the deliberations.
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