That lower G.D.P. number conceals two important points. First, by any measure people in the lower part of the income distribution are much better off in Nordic societies than their U.S. counterparts. That is, there is a lot less misery in Scandinavia — and because everyone has some chance of falling into low income, this reduces the risk of misery for a much larger share of the population
Second, much of the gap in real G.D.P. represents a choice, not a cost. Nordic workers have much more vacation, much more time for family and leisure, than their counterparts in our “no vacation nation.”
.. They aren’t “socialist,” if that means government control of the means of production. They are, however, quite strongly social-democratic: as Exhibit 1 shows, they have high taxes, which finance much more generous social benefits than we have here. They also have policies on wages, working hours, and more that tilt the balance toward workers in a number of dimensions.
.. Clearly, the Nordic economies are better for lower-income families — roughly the bottom 30 percent of the population.
.. But this understates the case, because these data don’t include “in kind” benefits like health care and education. All of the Nordic countries have universal health care — not just single-payer, but for the most part direct government provision (a.k.a. “socialized medicine.”)
Nordic education also lacks the glaring inequality in quality all too characteristic of the U.S. system.
.. Once you take these benefits into account, it’s likely that at least half the Nordic population are better off materially than their U.S. counterparts. But what about the upper half?
.. a large part of the difference — in the case of Denmark, more than all of it — comes from a lower number of hours worked annually per worker. This does not reflect mass underemployment. Instead, it reflects policy: all of the Nordic countries require that employers give workers a minimum of 25 days of paid vacation every year, while the U.S. has no leave policy at all.
.. Once you take vacations into account, Denmark and Sweden basically look comparable in performance to the U.S.
.. The point for welfare comparisons is that while Nordic families at, say, the 60th percentile of the income distribution have lower purchasing power than their American counterparts, they also have much more free time and an arguably better work-life balance. Are they really worse off? You can make a good case that taking all of this into account, the majority of Nordic citizens are actually better off than Americans.
.. The O.E.C.D. publishes measures of self-reported “life satisfaction”; all of the Nordic nations rank above the U.S. Objective measures like life expectancy and mortality rates are also much better in Scandinavia.