American Wealth: A Data-Driven Analysis

Introduction

America is rich—richer than many of its citizens admit. Yet the same refrain echoes everywhere: “We’re struggling. We’re falling behind. Poverty is everywhere.” Politicians repeat it, the media amplifies it, and people believe it. According to census data, 10.6% of Americans live in poverty. But they are a minority. Most Americans enjoy a level of wealth others can only dream of.

The average American is far better off than most people around the globe. In fact, many Americans labeled as “poor” enjoy living standards that exceed those of the middle class in many other countries. Yet this reality often goes unnoticed.

I know this firsthand. In late 2022, my wife and I left our home country, crossed an ocean, and made America our home. We moved to America because America is the land of opportunity, and we sought to become wealthier! It paid off! We are experiencing a higher quality of life here than back in New Zealand!

I will show you data, and we will see if that convinces you. If not, bring your own data and I might write a followup. But the evidence is overwhelming. America is not just wealthy. America is the benchmark for wealth.

GDP per Capita

What is wealth? How should we measure it? In this context, “wealth” is an “abundance of valuable possessions”. Alright, so how to measure it? We could look at GDP (Gross Domestic Product) per capita. This takes the nation’s total economic output and divides it by the number of people. Here are the top eight countries:

America is number seven on this list, with a GDP per capita of $89,110. Luxembourg, Ireland, Switzerland, Singapore, Iceland and Norway are all ahead of the United States. However, it does not follow that the average person in these countries is wealthier than the average US citizen.

GDP per capita is higher in Norway. But Norway has a 19.2% higher cost of living compared to America if you exclude rent. It is 6% higher if you include rent. Norway has a higher tax burden than America (1.72 times higher). This means Norwegians might earn more but have less to spend after taxes and living expenses. Luxembourg’s ranking is similarly problematic. They pay much higher taxes than Americans, and living costs are 12.9% higher.

But Luxembourg’s GDP per capita figure is 1.5 times higher! Does that not make up for higher living costs and taxes? It is more complicated. Luxembourg’s finance sector is vast, with significant foreign ownership. Most of the money doesn’t reach Luxembourg residents as income. It is a similar deal with Ireland. Many foreign companies set up in Ireland. That boosts Ireland’s GDP, but most of the money flows back to the company or foreign investors rather than to Irish residents (as it should). For some countries, GDP per capita captures economic activity that doesn’t translate into higher wages or salaries for local people. It doesn’t reliably show what people in that country earn.

Some of you are going to object that I am using GDP per capita. Fair enough! You find it by dividing a nation’s economic activity by its population. It’s a statistical mean and has many of the issues of such means. You can read about those here. GDP per capita has many problems as a wealth measure, which we cannot address fully here. Read this article to learn more.

Household Disposable Income per Capita

How else shall we measure wealth? We could use household disposable income per capita. As with GDP per capita, it takes the national income and divides it by the population. However, there are key differences. It takes the national income after people pay taxes (including for things such as Social Security and Medicare) and other mandatory payments (such as licenses and fees).

Household disposable income provides a better insight into spending after taxes and other deductions. While flawed, it better represents average income than GDP per capita by showing actual spending power after mandatory expenses. By this measure, the top eight countries are:

By this measure, America ranks as the wealthiest nation in the world. The average American is wealthier than peers in Luxembourg or Norway—and considerably wealthier than those in Ireland. Disposable income per capita offers a clearer picture of real living standards than GDP per capita and some other methods of measuring wealth.

Median Monthly Wages

Let’s look at median monthly wages. This includes pay from wages, salaries, bonuses, and other types of compensation.

Three countries have higher median wages than the US. However, the cost of living is higher in all three countries. Iceland and Luxembourg have higher taxes. Switzerland has a considerably higher cost of living. It is logical that salaries could be greater in these nations. The United States has a lower median wage, but Americans keep more of their income after taxes and essential living costs. They have more income to spend on comforts and luxuries.

Median Equalized Income

Next, we will examine average income adjusted for household size and composition, i.e., median equalized income.

The US trails Luxembourg again. However, the cost of living is higher in Ireland. Once again, we see Americans have more disposable income. By every reasonable measure of average income, Americans have more disposable income than everyone else once you account for taxes and living costs.

Air Conditioner Ownership

We’ll compare what percentage of people who own air conditioning in different countries. Presumably, the wealthier you are, the more likely it is that you can afford to buy and run an air conditioning unit. Is it a conclusive indicator of wealth? No, but it is an interesting data point.

The US is at the top! Much of the US has humid summers, so most Americans want AC. The units, and the energy to run them, are affordable to most Americans. Most Americans agree it is barbaric to live without AC! They are right! It is barbaric to live without AC in warm climates where you might need it!

You might assume that people in the UK don’t need air conditioning. Yet in recent years, they’ve faced an unusually high number of days topping 86°F (30°C)—and with homes designed to keep heat in, the swelter indoors can be even worse.

Are you going to tell me they do not need air conditioning in India? The number of dangerously hot days in India varies by region. It might be 18 in one region, and 42 in another. In May 2024, Delhi endured a 40-day period of temperatures over 100 degrees (40 C). Those were 40 days I bet most residents of the city would have loved to have air conditioning!

You might think, Surely America isn’t like India—it can’t get that hot. But in many parts of the country, extreme heat is a regular part of life. Phoenix, Arizona, averages 111 days a year over 100°F. Las Vegas sees about 78 such days, and Dallas, Texas, around 20. In 2024, even states like California and Kansas have already hit triple digits. Across most of the South, summer days often climb past 90°F. Having spent plenty of time in Florida, I can tell you—without air conditioning, the heat can be downright unbearable.

Vehicles Per Capita

Let us look at vehicles per capita. This is a rough estimate of how many vehicles owned per 1,000 people.

As we see, the US comes out ahead of almost everyone, at 860 vehicles per 1,000 people. New Zealand does better. Why? New Zealanders are wealthy. However, much of its population lives in rural or suburban regions with little access to robust public transportation. America is ahead of everyone except New Zealand. That makes sense. Americans have historically loved driving and considered learning to drive an essential aspect of being an independent adult (although the data suggests this is changing).