Spring 2013 URSP Participant Aaron Baker
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My
project title is Prosperity In European Social Welfare Countries and the United
States: A Comparative Analysis. My enthusiasm in this topic stems from the fact that I’ve always
wanted to understand why prosperity levels fluctuate worldwide.
My project is a
comparative analysis of the economic structure of America, France, Norway, and
the United Kingdom; the goal is to explore the correlation between economic
policies and the economic well being of people in these countries by measuring
standards of living. My mentor, Professor Donald J. Boudreaux, devised this
project after reading Myths of Rich & Poor by Michael Cox and Richard Alm. After learning of my mutual
interest in the topic we formulated a strategy to measure prosperity levels
based on work hours as opposed to the common method of comparing gross domestic
product.
My research is based
on the truism that the more goods and services a person is able to obtain the
more prosperous he is. Therefore, the rising prices of goods and services in
different nations is not a sufficient way to compare standards of living;
instead the amount of hours that an American works to purchase a basket of
goods is compared to the amount of hours that a Norwegian (or any foreigner)
must work to obtain the same basket in Norway (or any other country).
The task that I
perform on a weekly basis is the process of constructing a work-hour metric
that can be applied to any country. The pith and core of this metric consists
of collecting prices of goods and services for a basket of twenty pre-selected
items for the years 2003-2011. Hours have been spent searching the databases of
National Statistical Institutes (and other sources) around the world to find
the price of gasoline, electricity, tomatoes, bread, etc., for four different
countries. Next, the hourly wage of the average worker in four countries is
obtained for the same time frame. Lastly, the cost of the consumer basket is
divided by the hourly wage to determine the work-hour price of the basket. One
interesting thing I found this week is that the price of goods and services in
France, along with the wage rate of the average worker there pretty much rise
at the same rate.
This project has laid the foundation for my long-term
research goals. I will have a tool to effectively measure prosperity levels in
any nation without worrying about the complexities that come from currency
exchange rates and inflation levels. This is the beginning of many insightful
findings that have not been discovered.
