Spring 2013 URSP Participant Aaron Baker
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.