Nobel Laureates Esther Duflo and Abhijit Banerjee have a new piece in the New York Times. A reasonable summary of their position might be that they would like American economic policy to more closely resemble the economic policies of the Eurozone. This would include much higher taxes and also much more generous social welfare programs. They also claim that higher taxes and higher spending on social welfare programs would not significantly reduce work effort. They suggest that incentive effects are greatly overrated.
Note that the Eurozone is dramatically poorer than the US, with a per capita GDP of about $40,000 in 2018, vs. $62,600 in the US. Eurozone workers have lower productivity and they work far fewer hours. Eurozone incomes are comparable to those earned by residents of Mississippi.
Clearly there is no necessary contradiction here. Eurozone workers may work far fewer hours for reasons unrelated to “incentives”. But each time I ask a progressive to tell me why the Eurozone is so much poorer than America, they are completely unable to come up with an explanation that is even remotely plausible. (Thus “culture” doesn’t explain why the hours worked gap only opened up during my lifetime.)
In contrast, I do have an explanation for the gap. I believe that incentive effects are greatly underrated and that Eurozone residents have much less incentive to work than Americans.
PS. Please confine comments to the subject of the post. I’m not taking any position on whether the European economic system is better or worse than the US system. Comments that make normative claims about either system will be ignored.
READER COMMENTS
Thaomas
Oct 27 2019 at 3:41pm
EU US differences:
Much smaller integrated market (notwithstanding “single market”), echos of national markets
Worse regulatory environment (especially labor); most have lower “Doing Business” ratings that the US (even though US has lower than Nordic countries)
ECB has no “unemployment” mandate.
Lower levels of immigration.
Philo
Oct 27 2019 at 4:24pm
“According to the 2016 Yearbook of Immigration Statistics, the United States admitted 1.18 million legal immigrants in 2016” (Wikipedia). “Immigration to the EU from non-member countries was 2.4 million in 2017” (https://ec.europa.eu/eurostat/statistics-explained/index.php/Migration_and_migrant_population_statistics). So the EU has about twice as much immigration per year as the U.S.
On the other hand: “22.3 million people (4.4 %) of the 512.4 million people living in the EU on 1 January 2018 were non-EU citizens” (Ibid.), while: “In absolute numbers, the United States has a larger immigrant population than any other country, with 47 million immigrants as of 2015” (Wikipedia).
So the U.S. stock of immigrants is bigger, but the EU flow is bigger. (I didn’t look for statistics on emigrants.)
P Burgos
Oct 27 2019 at 9:58pm
That looks like an apple to oranges comparison. Do those EU numbers include illegal immigrants? What would the US numbers be if it did include unauthorized immigrants?
Scott Sumner
Oct 27 2019 at 9:06pm
Thaomas, Hard to see how a smaller market would make people work many fewer hours.
The ECB doesn’t impact the natural rate of unemployment.
Regulations may play a role, but then American progressives also tend to favor more labor market regulations.
Thaomas
Oct 28 2019 at 10:05am
I was addressing the overall income levels. I think the larger market makes t more likely for a Google/Amazon/Microsoft/Apple to originate and grow in the US.
If hours per week are lower, isn’t LFPR higher?
And I was also referring to the stock of immigrants and greater experience in assimilating immigrants (and possibly more easily assimilated immigrants).
It’s precisely the difference in attitudes toward regulation (need for cost benefit analysis case by case and preference for taxation over other forms of regulation, meaning skepticism in practice), not taxation, that separates “progressives” from “neo-liberals.”
Scott Sumner
Oct 29 2019 at 5:39pm
Hours worked per year are also much lower.
Larry
Oct 27 2019 at 4:54pm
Would PPP Median income after tax/transfers be more relevant here?
Scott Sumner
Oct 27 2019 at 9:07pm
Not really, I’m mainly interested in hours worked, which is affected by fewer hours worked for the employed in Europe, as well as higher unemployment.
Dylan
Oct 27 2019 at 5:24pm
Scott,
Europeans on average work fewer hours, and have lower per capita productivity. However, according to the OECD, 4 European countries have higher per hour productivity, and a good chunk of the rest of northern Europe is pretty close to the U.S. This doesn’t undermine your point that incentives matter, but it should be noted that pretty much all the difference in wealth comes solely from the fact that we work more hours, not that we’re somehow more productive with that time.
Scott Sumner
Oct 27 2019 at 9:13pm
Dylan, It’s also true that some American states earn much higher than average incomes. You need to compare apples with apples. Either compare the entire EU with the US, or compare rich areas of the US with rich areas of Europe.
Europe has lower productivity and fewer hours worked per capita. The fact that productivity in richer parts of Europe is comparable to productivity in average parts of the US doesn’t seem very interesting, at least to me.
Dylan
Oct 28 2019 at 6:02am
Scott, that’s just it, Europe has a broad array of different policies at a country level that would impact work effort, so it doesn’t really make sense to look at it at an aggregate level when it comes to something like this. When it comes to employment regulation, my sense at least is, that the differences between the states in the U.S. is much smaller than the differences between countries in the E.U.
Maybe you don’t agree, but I find it interesting that there are 8 countries in the EU that work longer hours than we do in the U.S., and that all of those except Ireland also have much lower productivity than the U.S. average (and as another poster mentioned last week, Ireland is kind of weird as far as these statistics are concerned). The countries that are about as productive as us on an hourly basis, like France, Germany, Denmark, Sweden, etc… have a lower per capita GDP primarily because they work ~300-400 hours per year less than we do. That’s at least consistent at the country level with a higher preference for leisure, and so I’m not sure it would be accurate to say they are poorer than us, unless you think wealth is only measured by GDP. Since these countries are also the ones that have the kind of policies that Duflo and Banerjee advocate for, it seems to make sense to look at them directly, rather than include countries like Poland, Greece, and Czechia that work more hours, have dramatically lower productivity, and also less welfare spending per capita than the U.S.
Trevor Adcock
Oct 29 2019 at 1:05am
It would be consistent with a higher preference for leisure if marginal tax rates on income were not also higher. A factor we know, both theoretically and empirically, to reduce hours worked.
To make your argument work you would have to argue that the number of hours worked in a non-distorted labor market is higher than is optimal. A lot of Europeans seem to implicitly believe this, but I’m not sure what their actual model is.
Scott Sumner
Oct 29 2019 at 5:43pm
Whether leisure is a good thing or not has no bearing on this post. I’m looking at the question of whether incentives impact work effort.
John K. Dawson
Oct 27 2019 at 6:51pm
I can’t speak much for the rest of Europe butI have many friends and relatives in Sweden and Norway. They are remarkable hard working people but something I heard years ago is also true for both:
“The Swedes work very hard, they work hard on their summer houses, they work on on their boats, they work hard on staying fit.”
Scott Sumner
Oct 29 2019 at 5:43pm
Good point. Those are types of “work” that are not taxed.
Lorenzo from Oz
Oct 27 2019 at 7:19pm
On the importance of incentive effects, especially over time. Yes.
Also, given the level of political discontent, the riots, the huge variations across Europe in economic outcomes, why exactly should the US copy that?
BTW, Deidre McCloskey (one of my intellectual heroes) lets go with both barrels over the latest Nobel memorial in economics.
https://www.washingtontimes.com/news/2019/oct/21/the-nobel-committee-has-lost-touch-with-actual-sci/
Scott Sumner
Oct 27 2019 at 9:14pm
Thanks, I look forward to reading that.
Phil H
Oct 27 2019 at 7:51pm
I’m not sure if this is on-topic enough, but it’s something I’ve wondered about for a long time. Can the U.S.A.’s natural assets explain its relatively greater wealth? If we make our null hypothesis that neither the U.S. nor Europe has a better system, by my reckoning, the U.S. has more oil and land per head than Europe.
But I don’t know how much difference that could possibly make. Clearly Russia shows that it’s possible to be poor with amazing resources; some Gulf countries show that it’s possible to be rich with amazing resources and poor governance. So could the U.S.’s extra resource endowment help, or does it actually make no difference to ongoing wealth?
Scott Sumner
Oct 27 2019 at 9:17pm
Phil, I’m skeptical of the claim that the US has much more oil. We produce far more oil, but that’s because our firms have far more incentive to produce oil. Fracking is very difficult to do in Europe, for instance.
In general, per capita GDP doesn’t correlate very well with resources, except in extremely oil rich countries with modest populations.
Matthias Görgens
Oct 28 2019 at 10:46am
I read that Poland has a lot of frackable oil, but their politics isn’t set up to handle it. (And they’d need to invest in the technology, the geography is different enough from the US that a straightforward copy wouldn’t work.)
Scott Sumner
Oct 28 2019 at 12:49pm
Of course Norway and the UK also have lots of oil, although admittedly neither are in the Eurozone.
David
Oct 27 2019 at 8:41pm
In this context, this paper seems relevant:
https://web.stanford.edu/~chadj/JonesKlenowAER2016.pdf
Scott Sumner
Oct 27 2019 at 9:18pm
That looks at an unrelated issue, comparing welfare.
P Burgos
Oct 27 2019 at 10:10pm
I don’t have data to back this up, but I have wondered about why US GDP per capita is so much higher than in Canada, and I wonder if some of the differences between Canada and the US also apply to a comparison between the US and the Eurozone.
One thing that the US has that Canada doesn’t are large, world leading industry clusters in finance (NYC), media (LA), and IT (SF Bay, Seattle). I would suspect that the US also is pretty far ahead of Canada in biotech as well. The US is also a behemoth when it comes to higher education, boasting a ridiculously disproportionate share of the world’s leading research universities. So there are some reasons why the US should be wealthier than other countries (or even regions like the Eurozone), that have to do with network effects/ industrial agglomeration. The fact that the top industries in the US have a pool of talent to draw upon of 330 million people, plus everyone else in the world (because the US is the world leader in IT, Biotech, Finance, Film, etc.) I think does give the US economy a bit of a boost. I also suspect that the US has a higher proportion of people who are immigrants and children of immigrants, which you would think would push up hours worked as well.
Scott Sumner
Oct 28 2019 at 12:51pm
Burgos, The immigrant argument doesn’t explain why the hours worked gap only opened up after the 1950s.
ChrisA
Oct 28 2019 at 12:35am
Is mean GDP per head the right measure here? I mention this since as we know the GDP figures can be highly distorted by head quarters locations and other factors, plus wealth effects are not captured. Maybe a better measure would be median ppp consumption, which deals with taxes as well as wealth, plus is not distorted by a small number of very wealthy people. On that basis US, UK, France and Canada are all very close on a per head basis. Of course many areas of Europe are much lower, but I would argue structural reasons for this rather than incentives.
Brandon Berg
Oct 28 2019 at 4:31am
What’s your source for this? I’ve never seen median consumption data, as Actual Individual Consumption (AIC) is generally reported in per capita rather than median terms.
My understanding is that AIC in the US is unusually high relative to GDP.
Mark
Oct 28 2019 at 8:36am
On a consumption basis, the US is 50% higher than France, and higher than Canada and the UK too: https://en.m.wikipedia.org/wiki/List_of_countries_by_household_final_consumption_expenditure_per_capita. Switzerland and Norway are the only countries higher than the US.
When visiting Europe, it seems apparent that Americans consume way more—our houses are much larger and more modern, and we drive many more automobiles and fewer bicycles and public transit (and housing and transport are the two largest categories of spending).
ChrisA
Oct 28 2019 at 10:12am
Mark – the table you link is household consumption, the UK has 2.1 people per household, the US has 2.6. So per your table per head consumption in US is $13.8k, UK is $12.8k, so not very different as I said. It is not PP adjusted also it is not median but mean. Of course you do get more for your money in many parts of the US, but how you account for this it is hard. Would you prefer a small flat in London for instance for a large house in a rural town in Wisconsin? If you value things like access to high end events then London would win, if you value space and privacy then perhaps Wisconsin would win.
artifex
Oct 28 2019 at 12:52pm
The table is total market value of household expenditure per capita, so your point about household head count is incorrect.
The World Bank has PPP-adjusted data for households and NPISHs final consumption expenditure. Just calculate the value per capita yourself and you see that US has the highest consumption per capita in the world, followed by Hong Kong and Switzerland.
But note that households final consumption expenditure does not include dwellings, and some countries calculate it by subtracting other expenses from production-based data used to calculate GDP.
ChrisA
Oct 28 2019 at 2:10pm
My bad, in my defense I was reading the link on my phone and it is pretty confusingly labeled!
Scott Sumner
Oct 28 2019 at 12:53pm
ChrisA, Consumption is not the right thing to measure, as it’s not what the incentives argument is about. In any case, consumption in America is far higher than in the Eurozone.
Mark Z
Oct 28 2019 at 2:42pm
Consumption may still be relevant though: wouldn’t we expect people to work fewer hours as consumption increases, as the utility of free time (/opportunity cost of work) goes up? So Europeans working fewer hours despite having such lower consumption may accentuate the magnitude of the differences in incentives to work between the US and Europe.
Brandon Berg
Oct 28 2019 at 4:19am
It seems to me that they’re inappropriately downplaying what strike me as fairly substantial findings in their own data, and conversely exaggerating the importance of findings that support their narrative.
12% and 13% of respondents said that they would stop working if they got a basic income or if Medicaid work requirements were eliminated. Even without accounting for social desirability bias, that’s a big deal!
72% said they would not work less if tax rates were raised. That’s 28% less than 100%!
I’m a bit surprised that they think these numbers bolster their case.
MikeDC
Oct 28 2019 at 3:34pm
I’m moving toward a general tongue-in-cheek theory of academic punditry under which this is, perhaps indirectly, great evidence for the power of “culture” to trump straightforward incentives.
Academic culture has reached the point that working for a Republican administration, especially the Orange Man (although this was happening even before him), or voicing evidence to anything that might be embraced by the right is worthy of a social death sentence.
Thus, even Nobel Laureates are forced, consciously or not, to bow before the mores of the public opinion (of Serious People), and express their learning in terms that conform to the public culture.
To do otherwise flies in the face of both purely tangible incentives (employment prospects) and the related but less quantifiable reality that if you don’t conform, you will be persona non grata in this world.
Mark Z
Oct 28 2019 at 2:53pm
I think the best argument that the difference between the US and Europe isn’t reflective of the effect of incentives to work less is that it’s actually caused by more heavily regulated labor markets in Europe. What – if anything – do the authors say about labor regulations?
P Burgos
Oct 29 2019 at 9:19pm
So what you are suggesting is that the disincentives to work are more on employers not to employ more people or have their own employees work more hours?
AMT
Oct 28 2019 at 9:06pm
I think progressives vastly underestimate how important incentives are to the bottom 4 quintiles, and conservatives overestimate how important they are to the top decile. I think I agree with Duflo and Banerjee that many of the highest paid people are very ambitious and strongly desire to be the best, so they are mostly competing for relative status, not so much their net income. In that case I could see very little deadweight loss from higher tax rates on the top few percent (I’m not sure just how high would be too high, or where to draw the line though).
But they are completely out to lunch just believing some garbage questions that people give false responses to in a survey. Not to mention their explanation of the responses seems to mischaracterize what the responses actually show. e.g. “Seventy-two percent of them declared that an increase in taxes would “not at all” lead them to stop working.” Ok…stop doesn’t mean work fewer hours… so that means that 28 percent of people would quit working if their taxes went up? Maybe they’re just terrible writers that cannot communicate effectively, I don’t know. But then when you look at their chart it completely contradicts what they actually say. Are they intentionally trying to mislead people?! Or, do their survey results give completely contradictory responses? Either way you shouldn’t put too much faith in it.
e.g. “If tax rates went up for you/the middle class, would it encourage…[quitting work/working less?]”
It looks like about 40% of people even admit they would work less if their taxes went up! And remember, a substantial portion of these people are living in a world with relatively fixed schedules and may not be easily able to work less than the standard full-time shift they are employed for.
And then approximately 35% were not expected to work less, implying that the income effect dominates the substitution effect to leisure (or else we should expect 100% of people to be “encouraged” to work less!). But I think the evidence you cite from Europe is extremely persuasive to show that at least in the long run, incentive effects are very powerful and substantially reduce labor output for the vast majority of the population.
Also, every time someone cites a UBI “experiment” or something like it, you can never let them make any kind of conclusion about how it affects long run labor supply. Of course people didn’t quit their jobs or reduce their hours much (again, even assuming they could reduce them much!) when they got what THEY KNEW was a TEMPORARY income boost. Their lifetime expected income was barely changed, so of course their labor supply should barely change. That provides us with basically no information on how labor supply will change in the long run (e.g. for future generations) when people react to very significant permanent (expected to be, anyway) changes in the welfare and tax structure. “How might we estimate what those effects would be? Maybe look to a continent that has followed that structure for a significant period of time? Nah!”
Honestly, I’m not sure if Duflo and Banerjee are just trolling, or just ignorant in that article. I’m very disappointed because I thought Poor Economics was an amazing book.
AMT
Oct 28 2019 at 9:09pm
Apparently trying to make one word bold and italics messed something up…
Duncan E
Oct 28 2019 at 9:56pm
A post above mentions in the US you have work requirements for Medicaid. Do part time office workers also receive reduced health insurance benefits? Obviously in Europe at least basic health care is free for all. I suspect this hours effect could be another US healthcare issue?
Mikk Salu
Oct 29 2019 at 7:34am
I am not sure how useful it is to compare EU or eurozone to the US. European countries are different. US is more homogeneous. European countries have different languages, cultures, histories, policies. For instance, Croatia is a eurozone member who emerged from a bloody civil war 25 years ago. Spain came from a decades-long dictatorship. Estonia and Latvia were part of the Soviet Union. Poland and eastern Germany have a communist background. Czech Republic (not eurozone member) and Slovakia (eurozone member) lived through dissolution.
Not saying that incentives do not matter, they do, but comparing the US and EU is not very useful.
Btw, when visiting the US, it seems “cheaper” or “poorer” than many places in Western Europe. It may be cultural bias, but Tyler Cowen, I think, once said, that Western Europe looks “visually” richer because of its palaces, castles, old towns, cultural and historical baggage, etc.
Scott Sumner
Oct 29 2019 at 5:50pm
Mikk, The US also has many different cultures. There are big differences between Mormons, West Virginians, Native Americans, blacks, Hispanics, Asians, Jews, New Englanders, Muslims, and numerous other groups.
Perhaps Eastern Europeans are held back by the legacy of communism, but couldn’t the same be said about blacks and Native Americans, who are also impacted by their history?
Anonymous
Oct 30 2019 at 2:05pm
“Btw, when visiting the US, it seems “cheaper” or “poorer” than many places in Western Europe.”
Interesting! I visit Western Europe regularly and I always get the opposite impression.
Jim B.
Oct 29 2019 at 7:47am
US gdp per capital in 2018, measured in constant 2010 dollars was about 55k. Looking at some Eurozone countries that we’re original members, that rates higher than some (Germany Finland and Belgium between 46-48k, and France and UK around 43k); it rates much lower than some, too (Denmark 57k, Finland 62k, Switzerland 78k, 93k, Luxembourg 107k.
My point is that it’s not really appropriate to like the Eurozone all together as one, especially some of the historically poorer nations in eastern and southern Europe, where other institutional problems than just the size of government are more of a drag.
Maybe your story works, but your readers shouldn’t be convinced by anecdote and hearsay.
Mark Brady
Oct 29 2019 at 3:50pm
Neither Denmark nor Switzerland nor the UK is a member of the eurozone. And Switzerland is not a member of the European Union.
Scott Sumner
Oct 29 2019 at 5:57pm
Jim, Your data is inaccurate. Check out my links. Apart from Luxembourg (which is tiny) and Ireland (hugely distorted by multinational incomes owned by outsiders), all Eurozone members are at least 9% poorer than the US, and most are far poorer than that.
It’s true that Switzerland and Ireland are relatively affluent. They are also countries that have opted not to adopt the high tax European model. So that actually supports my point.
adam
Oct 29 2019 at 11:40am
Does it really make sense to talk about the Eurozone as compared to the US in this context? The EU doesn’t set the policies/laws that plausibly would affect work incentives. Issues like income taxes, employment taxes, social benefits (unemployment insurance, health insurance, paid leave), working hours laws, laws about hiring and firing employees, minimum wage laws, etc. are all set at the national level. In the US, those issues are governed by both federal and state law, with federal law taking a very important role so that there is less variation among states.
Dries
Oct 29 2019 at 12:56pm
Important question that has puzzled me for some time.
Some important potential explanations in the comments: differences in number of hours worked, but not in productivity, lesser market integration and more burdensome regulatory systems in the eurozone.
Here are two other hypotheses:
1/ Higher rates of marketization in the US compared to Europe, leading to the under-valuation of equivalent goods. As in, the prevalence of state-produced goods in Europe, like in healthcare, that exist outside a fully functioning market system, means that their value is underestimated. Considering the differences in health outcomes, one could even argue their value are dramatically underestimated (although ofc need to consider differences, in diets, etc). I know it’s been argued by some economists, although I would need to find the articles.
Besides, for cultural reasons, many goods and services that are exchanged using hard currency in the US are bartered or offered in Europe. For instance, family members wouldn’t make each other pay for services the way Americans do. Pretty sure there’s a lot of research on that also.
2/ That may seem very far-fetched, and is clearly outside my expertise, but couldn’t it be argued that the value of the economic production of the US is constantly overestimated, due to the leading role of the dollar? Its status as the world reserve currency means the rest of the world keeps buying it, propelling its levels relative to other currencies, irrespective of the fundamental value of the American economy.
Conversely, it can posited that the conservative economic policies of some eurozone members (eg Germany) means the euro is undervalued.
I also agree that the US should be compared to Western European economies. Some eurozone members like the Baltics or Slovakia awoke from socialism only thirty years ago.
Bashar H. Malkawi
Oct 29 2019 at 11:51pm
The Euro zone adopts social welfare system that focuses on individual and family welfare especially in France. This means fewer working hours, more welfare services, and lower wages. By contrast, innovation and creativity is abundance in the U.S which leads to competitiveness.
Bashar H. Malkawi
MJ
Oct 30 2019 at 12:35pm
So within Europe or within the US there’s little or no correlation between hours worked and tax rates and/or welfare spending, but we’re supposed to accept the less apples to apples comparison of Europe vs the US to prove that the opposite is true?
John Arthur
Oct 30 2019 at 1:03pm
Scott: The differences are more pronounced when you adjust for demographics. We have a very poor African and Hispanic population that Europe does not, when you demographically adjust I would think the differences between Whites in America and Whites in Europe are much larger than stated. I would think the per capita GDP of White American workers is something in the 80k range, maybe even in the 90k range.
When I visited London and Paris this year, I was shocked to notice how poor the cities looked to me. They didn’t seem to have living standards of even that of a mid tier American city. Of course, I’m sure that there are suburbs and enclaves that I didn’t go to with great affulence, but I came away not really impressed with the trajectory of those countries.
Although in fairness, this may have been due to the fact that modern construction is somewhat limited in those cities, as they try to retain the old asthetics from back then.
Jens
Oct 31 2019 at 4:33am
This post and comments are quite interesting. Somehow they resemble a lesson in “framing”.
I personally don’t have that much doubt, that the eagerness for certain forms of work (you get paid for, i.e. appears in GDP and related metrics) diminishes, when certain incentives are off the table (need to .. “work to eat”, “work to get training or education”, “work to get a home”, “work to stay healthy”, “work to get stuff you need or you *think* you need”, …).
And on top of that there are several truths about europe and the eurozone involved. Neither the eurozone nor the european union are nation states (somebody has to mention ^^). The nation states of the european union have very different politics and policies. Some members are famous for their governmental ineffeciencies (and have been for a long time). Mobility of work is still not that high. There are many languages and traditions. The non-eurozone members of the european union (and associated countries) have even been performing better in the last years. E.g. Poland is ruled very conservatively, critized often by the eu officials for lack of rule of law, but implementing quite a lot of governmental transfers and getting lots of eu subsidies, and they are doing quite well indeed, good people.
Several countries have experienced severe crisis in the last decades. Some due to monetary and financial issues. But also the end of communism/socialism wasn’t immediately the beginning of better era everywhere, but often led to temporary full stop crisis (with all its negative side effects). Automatic stabilizers don’t work that good in the eu and the eurozone (or they don’t exist at all). And – last but not least – the eu itself is based on huge subsidies, which are often inefficient, but many europeans share the impression, that paying for peace (even with inefficient mechanisms) is better than having wars, which is still an inherent and underlying fear (and not a total irrational one). This list can be continued for a long time. Europe is much more fragile than the US (that doesn’t mean that the US are less complex or diverse).
And of course there may be policies and political preferences ( for more equality, less poverty, … ) that are simply not compatible with certain forms of incentives and so there is no way to optimize a political environment for all of the possible goals. (I don’t think that’s a normative claim btw. because optimizing for a goal, even or especially if it has several dimensions, is not really a normative question, but a economical. Setting the goals is the normative thing).
Another interesting part of the comments are concerned with aesthetics. I’m from Germany (readers certainly noticed that english is not my first language). I took over a house from my father that was built in the 80s, in which i live with my family (wife, 2 kids). From the outside it certainly looks small and poor to US american eyes (but it certainly doesn’t look wrecked). I know some Americans, because i live close to Ramstein airbase and i think i am a bit familiar with some of their preferences. But the house i got endowed (!) from my father is a very durable and efficient unit of living. I improved it’s thermal insulation, installed photovoltaics, use some forms of smart home metering and control (but not that much, because most smart home technology is bullshit time sinks) in the last years very much – partly myself, partly contractor – and i can say now that i have very small energetical fingerprint (and small costs), but in terms of GDP you won’t see that much of it. How something “looks from the outside” is of total non-importance to me (but that’s just me).
Not really focused this comment, i hope that’s ok 🙂
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