Last week in our blog, I wrote about the cost of living in Finland. In it, I compared the cost of living in Finland against that of selected other countries. This week, I continue such comparisons but take a slightly broader view. I look at the standard of living in Finland and in the selected other countries.
The topic of this week’s blog comes from the comments my last blog generated online. Some readers suggested that I should also compare income levels between Finland and the other countries. Such comparisons would put the Finnish cost of living in context. That’s a fair suggestion.
But rather than focus only on income level comparisons, I’ll be using a few additional measures as well. We’ll start with mean income level differences. Then move onto more multidimensional measures of the standard of living in Finland and elsewhere.
Measuring the standard of living by income levels
For Europe, we can look at the adjusted gross disposable income of households per capita. That reflects the purchasing power of households and their ability to invest. It takes into account taxes and social benefits.
Rather than look at the straight-up income figures, we can examine differences through an index based on them. Here, the European Union average is set at 100. If the country’s index is higher than 100, the country’s income level per person is higher than the European average.
In Finland, consumer prices, in general, were 25.6 % higher in 2019 than in Europe on average. The Finnish adjusted gross disposable income level, in turn, was 11 % higher than the European average in 2018.
Prices in Sweden, one of the countries we measured Finland against last week, were 23 % higher in 2019 than prices in Europe on average. The Swedish income level, in turn, was 7 % higher.
OECD has data on the household disposable incomes of some of the countries we talked about last week.
|Country||Household disposable income in 2019 (US$/capita)|
These figures confirm what many of the readers said. That Finnish income levels, in general, match the high cost of living.
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Other ways to measure the standard of living in Finland and elsewhere
Knowing that a country has a relatively high cost of living and income levels to match doesn’t tell us much about the country. To get a fuller picture of the standard of living in a country, we must consider other factors as well. Here are a few more complex measures.
Human Development Index
The United Nations Development Programme created the Human Development Index to emphasize that people and their capabilities should be factored in when assessing the development of a country. Mere economic growth is not enough.
This index takes into account human health, knowledge, and the economy. It factors in life expectancy at birth, expected and mean years of schooling, and gross national income per capita. These three indices together are used to create the Human Development Index.
The latest Human Development Index Rankings are from 2020. Among the top 10 countries, 5 are Nordic countries. Finland doesn’t quite make it to the top 10. We are in the 11th position together with Singapore.
|Country||Human Development Index||Rank|
Better Life Index
Another broader measure of the standard of living in a country is the OECD’s Better Life Index. I briefly referenced it last week.
This index allows comparisons across different countries along 11 different topics. The topics and indices included in them are:
- Housing: rooms per person, dwellings with basic facilities, and housing expenditure;
- Income: household net adjusted disposable income and household net wealth;
- Job: employment rate, long-term unemployment rate, personal earnings, and job security;
- Community: quality of social support network;
- Education: educational attainment, student skills, and years in education;
- Environment: air pollution, and water quality;
- Civic Engagement: voter turnout, and stakeholder engagement for developing regulations;
- Health: self-reported health, and life expectancy;
- Life Satisfaction: life satisfaction;
- Safety: homicide rate, and feeling safe walking alone at night;
- Work-Life Balance: time devoted to leisure and personal care, and employees working very long hours.
The OECD website allows users to build their own index and ranking by weighing these topics based on their importance to the user. Users can also examine how countries fare when each of these topics has equal weight. Users can also examine country rankings within a topic.
When all the topics weigh equally the country at the top of the ranking is Norway. Again, Nordic countries do well. All Nordic countries are within the top 10. Finland’s rank is 9th. Last of the Nordic countries just behind Sweden.
Of our other comparison countries, only Estonia and Russia are included in this index. Estonia is in 21st place and Russia in 33rd place.
Here are the ranks for Finland, Sweden, Estonia, and Russia in all of the 11 topics out of the 40 countries ranked.
Happiest Country in the World
One measure that both delights and puzzles Finns is the Happiest Country in the World Index that the UN has now calculated nine times. Finland has now been the happiest country in the world four years in a row.
The primary source of this report is the Gallup World Poll. That asks respondents to evaluate their current life as a whole with the best possible life being 10 and the worst possible being 0.
The Poll also asks respondents about positive and negative emotions they may have felt during the day before polling. Laughing, smiling, and feeling enjoyment are counted as having positive emotions. The Poll identifies worry, sadness, and anger as negative emotions.
Life evaluations are usually a more stable measure but this year in particular they wanted to track the emotional effects of the COVIC pandemic.
An additional measure in the same report was the WELLBY measure. That combines people’s well-being with life expectancy. Finland tops this chart as well.
Our comparison countries in this ranking fare as follows:
Here are only a few different measures we can use to gauge the standard of living in Finland compared to other places. There are of course additional single measures such as maternal and infant mortality rates, literacy rates, and different types of inequality measures. The results wouldn’t change much. Finland is a pretty good place to live in!
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