A previous post of mine made me think about something that hadn't occurred to me before. If Americans waste twice more food and spend twice more on energy (heating, electricity, gasoline) than Europeans, then they are spending a considerable amount of money without getting more out of it than Europeans. That's just wasted money. Add to this the huge cost of medical insurance and tertiary education in America. In the end, are higher American salaries worth it? Or are the extra wages just wasted compared to what Europeans don't have to pay for? That's what I am going to answer here.
Energy expenditures
Let's take some concrete examples comparing the energy consumption of an average American, French and Japanese citizen for electricity, natural gas and gasoline/petrol. Note that in all cases energy is cheaper in the United States, but Americans consume more of every kind of energy. So, who will end up with the largest bill at the end of the year?
Electricity costs 0.18 US$ per kilowatt-hour in the US (source), but 0.21$ in France. That's just 16% more. But in average Americans use 12,700 KWh per person (source), while an average French spends 7,260 KWh. This means that an American will spend on average 2286$ on electricity per year, against 1524$ for a French person. That's 33% more money wasted on electricity. A Japanese would use 7800 KWh per year at 0.25$ per KWh, for a total of 1950$ per year, also considerably less than an American.
For natural gas, an American consume 26 MWh per year (source) at a price of 0.055$ per KWh (source). That's 1430$ per year. A French person will consume 6 MWh per year at 0.174$ for a total cost of 1044$ per year. A Japanese will consume 8 MWh per year at 0.131$ for a total cost of 1048$ per year. So Americans are wasting about 40% more on natural gas.
Regarding gasoline, Americans consume on average 1602 litres per year per capita (source) at an average price of 1.098$ per litre (source), which amounts to 1759$ per person per year. A French person consumes 160 litres per year (yes, that's correct, 10 times less than an American!) at 2.077$/litre for a total of 333$ per year. A Japanese consumes 445 litres per year at 1.23$/litre for a total of 547$ per year. Even with gasoline prices being twice higher in France (or elsewhere in Western Europe) than in the US, Americans consume so much gasoline that they end up spending nearly five times more money per person than a French person or four times more than a Japanese.
Here is a summary table of the utility cost per person per year. I have added Spain, Switzerland and the UK too for good measure.
So just for energy, an American will spend nearly 2500$ more per year than a French person. As these as per capita averages, for a family of four that'd be 10,000$ more in the US.
Food prices and food waste
It's a bit harder to compare food consumption and prices, but according to Numbeo grocery prices are actually 10% higher in the USA than in France, and 30% higher than in Japan. I thought that food was cheaper in the US, but I was wrong. Add to this that Americans waste exactly twice more food than the French and six times more than the Japanese and it's undeniable that Americans are wasting hundreds, if not thousands of dollars more of food per person per year than European or Japanese people.
Cost of healthcare
What really sets Americans apart from the rest of the developed world in terms of costs is healthcare. According to this website, medical insurance costs in average 560$ per month (6720$ per year) for a 40-year-old in the US, although for some reason the average premiums vary a lot by state from 372$ in New Hampshire to 882$ in Wyoming. Forbes shows the price variations by age and monthly premiums shoot up to over 1,000$ per month from 60 years old!
In contrast, a private health insurance costs about €40 per month in France, 35€ in Sweden, and is completely free in the UK! In Belgium, basic health cover starts from 12.5€ per month (per family, not even per person) and with a comprehensive hospitalisation insurance with private room the total reaches 35€/month. What's more, in Europe premiums don't change much with age.
So Europeans save anywhere between 6,000$ and 12,000$ annually on their medical insurance compared to Americans depending on their country and age.
Cost of education
Another major difference between Europe and the United States is the cost of non-compulsory education.
According to this site and that site, preschool (aka kindergarten) in the USA typically costs between $1,000 and $5,000 per year, but can cost up to $34,000 for reputed private schools! In contrast, it is generally free or very cheap in Europe. There are always exception if one wishes to attend a private school. The most expensive private preschool I could find in Europe was in Switzerland, where the price ranges between $1575 to $3200 per year. But that's in the most expensive country in Europe, where wages are higher than in the USA, and even there the price of private preschool is equivalent to that a public preschool in the U.S.
As for university, average annual cost of tuition and fees is $10,000 per year if a public and in-state, $23,000 if public and out-of-state, and $39,000 if private, and $59,000 for Ivy League. It normally takes 4 years to complete a bachelor's degree in the US, but in reality based on these statistics, only 44% of students manage to graduate within 4 years, 20% take 4 to 5 years, 10% take 5 to 6 years, 13.6% take 6 to 10 years, and 12.3% take more than 10 years! So a lowly bachelor's degree can cost anywhere between $40,000 for a good student at an in-state public university to over $500,000 for a bad student at an Ivy League institution (although that's unlikely to happen as they only accept the best). According to this site, the true average cost of college in the United States is $36,436 per student per year, including books, supplies, and daily living expenses. If we are generous and take 5 years as the average length of time to complete a BA or BSc, a bachelor degree in the U.S. would cost about $182,000 in average! If one does a master's degree, that would add about $80,000 extra (the average tuition fee itself for a MA range from $44,000-$57,000 for two years, to which must be added books, supplies, and daily living expenses).
If we spread the cost of college education over a 40-year career, a bachelor's degree end up costing $4,550 per year, while a master's degree amounts to $6,550 per year.
Compare that with a free degree in most of Europe. The UK has the highest university tuition fees in Europe and they are capped to a maximum of £9,250 (about $11,000) per year for undergraduate studies and £6,000 for postgraduate studies. So the highest tuition fee in the UK to study for example at prestigious universities like Oxford, Cambridge, UCL or Imperial College London, is the same as the lowest in the US for a public, in-state university. Most public universities in the US are not ranked in the top 100 worldwide. The only exceptions I could find were the University of California, the University of Michigan-Ann Arbor, the University of Illinois at Urbana-Champaign, the University of North Carolina at Chapel Hill, and the University of Washington-Seattle. That's only 5 states where local students can hope to study at relatively low-cost at a world class university. I suppose that competition to join is intense.
Conclusion
If we add up the cost of education, health insurance, and energy expenditures, an American university graduate would spend in average between $13,000 and $21,000 extra per year compared to a European (i.e. $1,085 to $1,750 per month). And that does not take into account the higher cost of groceries and the fact that Americans waste twice more food than Europeans in average. That could easily add another $1,000 per year. So even if the US has a higher GDP per capita, most of the difference is in fact wasted and does not contribute to higher standards of living.
Here is a list from the United Nations showing the gross average monthly wages by country. These are wages and salaries per full-time equivalent employee. Americans do earn more than most Europeans, but if we deduct the monthly $1,085 to $1,750 wasted on things for which Europeans don't need to pay, the Americans earn very similar salaries to the European average, somewhere between the Dutch and the Germans.
Overall, Americans make decent salaries even after paying for education, healthcare and energy.
Houses tend to be cheaper in the US, meaning that with the same amount of money an American will be able to afford a bigger house than a Briton, Dutch, Belgian, German or Scandinavian - although the biggest difference in any country is between city and countryside. Usually the bigger the city the higher the real estate prices. Average house prices in the US are lower because the country is huge and has lots of relatively empty spaces where land is very cheap. But who wants to live in the middle of nowhere like Kansas, Oklahoma or Dakota?
Yet quality of life in European cities is almost always better than in American ones according to various indices. For example, Mercer's Quality of Living Ranking analysed 231 cities worldwide based on criteria such as safety, education, hygiene, health care, culture, environment, recreation, political-economic stability, public transport and access to goods and services. The top U.S. city was San Francisco, which ranked 34th, followed by Honolulu 37th, and New York 44th. All major West European capitals and major cities were ranked higher than New York, except Madrid and Rome, which were not far behind.
Energy expenditures
Let's take some concrete examples comparing the energy consumption of an average American, French and Japanese citizen for electricity, natural gas and gasoline/petrol. Note that in all cases energy is cheaper in the United States, but Americans consume more of every kind of energy. So, who will end up with the largest bill at the end of the year?
Electricity costs 0.18 US$ per kilowatt-hour in the US (source), but 0.21$ in France. That's just 16% more. But in average Americans use 12,700 KWh per person (source), while an average French spends 7,260 KWh. This means that an American will spend on average 2286$ on electricity per year, against 1524$ for a French person. That's 33% more money wasted on electricity. A Japanese would use 7800 KWh per year at 0.25$ per KWh, for a total of 1950$ per year, also considerably less than an American.
For natural gas, an American consume 26 MWh per year (source) at a price of 0.055$ per KWh (source). That's 1430$ per year. A French person will consume 6 MWh per year at 0.174$ for a total cost of 1044$ per year. A Japanese will consume 8 MWh per year at 0.131$ for a total cost of 1048$ per year. So Americans are wasting about 40% more on natural gas.
Regarding gasoline, Americans consume on average 1602 litres per year per capita (source) at an average price of 1.098$ per litre (source), which amounts to 1759$ per person per year. A French person consumes 160 litres per year (yes, that's correct, 10 times less than an American!) at 2.077$/litre for a total of 333$ per year. A Japanese consumes 445 litres per year at 1.23$/litre for a total of 547$ per year. Even with gasoline prices being twice higher in France (or elsewhere in Western Europe) than in the US, Americans consume so much gasoline that they end up spending nearly five times more money per person than a French person or four times more than a Japanese.
Here is a summary table of the utility cost per person per year. I have added Spain, Switzerland and the UK too for good measure.
| Country | Electricity | Natural gas | Gasoline | Total |
| USA | 2286$ | 1430$ | 1759$ | 5,475$ |
| France | 1524$ | 1044$ | 333$ | 2,901$ |
| Spain | 1738$ | 1337$ | 260$ | 3,335$ |
| Switzerland | 2206$ | 597$ | 1056$ | 3,859$ |
| United Kingdom | 1973$ | 1338$ | 543$ | 3,854$ |
| Japan | 1950$ | 1048$ | 547$ | 3,545$ |
So just for energy, an American will spend nearly 2500$ more per year than a French person. As these as per capita averages, for a family of four that'd be 10,000$ more in the US.
Food prices and food waste
It's a bit harder to compare food consumption and prices, but according to Numbeo grocery prices are actually 10% higher in the USA than in France, and 30% higher than in Japan. I thought that food was cheaper in the US, but I was wrong. Add to this that Americans waste exactly twice more food than the French and six times more than the Japanese and it's undeniable that Americans are wasting hundreds, if not thousands of dollars more of food per person per year than European or Japanese people.
Cost of healthcare
What really sets Americans apart from the rest of the developed world in terms of costs is healthcare. According to this website, medical insurance costs in average 560$ per month (6720$ per year) for a 40-year-old in the US, although for some reason the average premiums vary a lot by state from 372$ in New Hampshire to 882$ in Wyoming. Forbes shows the price variations by age and monthly premiums shoot up to over 1,000$ per month from 60 years old!
In contrast, a private health insurance costs about €40 per month in France, 35€ in Sweden, and is completely free in the UK! In Belgium, basic health cover starts from 12.5€ per month (per family, not even per person) and with a comprehensive hospitalisation insurance with private room the total reaches 35€/month. What's more, in Europe premiums don't change much with age.
So Europeans save anywhere between 6,000$ and 12,000$ annually on their medical insurance compared to Americans depending on their country and age.
Cost of education
Another major difference between Europe and the United States is the cost of non-compulsory education.
According to this site and that site, preschool (aka kindergarten) in the USA typically costs between $1,000 and $5,000 per year, but can cost up to $34,000 for reputed private schools! In contrast, it is generally free or very cheap in Europe. There are always exception if one wishes to attend a private school. The most expensive private preschool I could find in Europe was in Switzerland, where the price ranges between $1575 to $3200 per year. But that's in the most expensive country in Europe, where wages are higher than in the USA, and even there the price of private preschool is equivalent to that a public preschool in the U.S.
As for university, average annual cost of tuition and fees is $10,000 per year if a public and in-state, $23,000 if public and out-of-state, and $39,000 if private, and $59,000 for Ivy League. It normally takes 4 years to complete a bachelor's degree in the US, but in reality based on these statistics, only 44% of students manage to graduate within 4 years, 20% take 4 to 5 years, 10% take 5 to 6 years, 13.6% take 6 to 10 years, and 12.3% take more than 10 years! So a lowly bachelor's degree can cost anywhere between $40,000 for a good student at an in-state public university to over $500,000 for a bad student at an Ivy League institution (although that's unlikely to happen as they only accept the best). According to this site, the true average cost of college in the United States is $36,436 per student per year, including books, supplies, and daily living expenses. If we are generous and take 5 years as the average length of time to complete a BA or BSc, a bachelor degree in the U.S. would cost about $182,000 in average! If one does a master's degree, that would add about $80,000 extra (the average tuition fee itself for a MA range from $44,000-$57,000 for two years, to which must be added books, supplies, and daily living expenses).
If we spread the cost of college education over a 40-year career, a bachelor's degree end up costing $4,550 per year, while a master's degree amounts to $6,550 per year.
Compare that with a free degree in most of Europe. The UK has the highest university tuition fees in Europe and they are capped to a maximum of £9,250 (about $11,000) per year for undergraduate studies and £6,000 for postgraduate studies. So the highest tuition fee in the UK to study for example at prestigious universities like Oxford, Cambridge, UCL or Imperial College London, is the same as the lowest in the US for a public, in-state university. Most public universities in the US are not ranked in the top 100 worldwide. The only exceptions I could find were the University of California, the University of Michigan-Ann Arbor, the University of Illinois at Urbana-Champaign, the University of North Carolina at Chapel Hill, and the University of Washington-Seattle. That's only 5 states where local students can hope to study at relatively low-cost at a world class university. I suppose that competition to join is intense.
Conclusion
If we add up the cost of education, health insurance, and energy expenditures, an American university graduate would spend in average between $13,000 and $21,000 extra per year compared to a European (i.e. $1,085 to $1,750 per month). And that does not take into account the higher cost of groceries and the fact that Americans waste twice more food than Europeans in average. That could easily add another $1,000 per year. So even if the US has a higher GDP per capita, most of the difference is in fact wasted and does not contribute to higher standards of living.
Here is a list from the United Nations showing the gross average monthly wages by country. These are wages and salaries per full-time equivalent employee. Americans do earn more than most Europeans, but if we deduct the monthly $1,085 to $1,750 wasted on things for which Europeans don't need to pay, the Americans earn very similar salaries to the European average, somewhere between the Dutch and the Germans.
| Country | Gross Average Monthly Wages in 2020 (US$, at current Exchange Rates) |
|---|---|
| 7,712.7 USD |
| 6,228.8 USD |
| 5,862.5 USD |
| 5,782.6 USD |
| 5,701.1 USD |
| 5,247.5 USD |
| 4,764.8 USD |
| 4,681.6 USD |
| 4,489.7 USD |
| 4,352.7 USD |
| 4,253.5 USD |
| 4,063.5 USD |
| 4,061.7 USD |
| 4,045.0 USD |
| 3,952.7 USD |
| 3,616.2 USD |
| 3,351.7 USD |
| 2,658.8 USD |
| 2,520.2 USD |
| 2,494.7 USD |
Overall, Americans make decent salaries even after paying for education, healthcare and energy.
Houses tend to be cheaper in the US, meaning that with the same amount of money an American will be able to afford a bigger house than a Briton, Dutch, Belgian, German or Scandinavian - although the biggest difference in any country is between city and countryside. Usually the bigger the city the higher the real estate prices. Average house prices in the US are lower because the country is huge and has lots of relatively empty spaces where land is very cheap. But who wants to live in the middle of nowhere like Kansas, Oklahoma or Dakota?
Yet quality of life in European cities is almost always better than in American ones according to various indices. For example, Mercer's Quality of Living Ranking analysed 231 cities worldwide based on criteria such as safety, education, hygiene, health care, culture, environment, recreation, political-economic stability, public transport and access to goods and services. The top U.S. city was San Francisco, which ranked 34th, followed by Honolulu 37th, and New York 44th. All major West European capitals and major cities were ranked higher than New York, except Madrid and Rome, which were not far behind.
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