Cornwall and Wales under purchasing power parity (British average is over)

by on May 6, 2014 at 12:54 pm in Current Affairs, Data Source, Economics | Permalink

The grim truth about pay and living standards in some the regions of the UK has also been highlighted by official EU figures showing that parts of Britain are effectively poorer that countries from  former communist countries in Eastern Europe.

People in Cornwall and the Welsh Valleys are worse off than residents of Estonia and Lithuania, according to Eurostat figures comparing wealth across the EU using a measure known as “purchasing power standards” – which takes into account GDP per person and cost of living.

In addition, Durham and the Tees Valley, in the north east of England, are poorer than those in the wealthiest regions of Bulgaria and Romania, the two most deprived countries in the EU.

By contrast, the Eurostat figures show that London is the richest place in Europe.

There is more here.

msgkings May 6, 2014 at 1:44 pm

How is this ‘news’? Countries should all be uniform?

Adrian Turcu May 6, 2014 at 1:48 pm

I’m from Romania, and that doesn’t seem like such a big deal to me. The East has done some catch-up, I would be surprised if the richest areas in my country would live poorer then every other in Europe.

maros. May 6, 2014 at 2:03 pm

Not to mention that Brits still have an option to spend their nominal income in cheaper countries and many of them indeed do. This option is very valuable and not built into PPP statistics.

tt May 6, 2014 at 1:50 pm

People in Queens are worse off than residents of Manhattan,….

agorabum May 6, 2014 at 1:56 pm

The mistake of thinking that ‘average is over’ is to presume that these places were once wealthy, and on par (or close to) London.
The Welsh Valleys were dirty and poor from coal mining before the war, and after the war, there was a massive decline in the British coal industry, and what was left was killed off during the Thatcher government.
Since then, the unemployment has been the highest in the UK. It’s basically the UKs appalachia.
I wouldn’t be surprised if they were sometimes poorer than parts of Bulgaria during communist times…(ok, a i would be surprised for Romania)

JWatts May 6, 2014 at 2:12 pm

“The mistake of thinking that ‘average is over’ is to presume that these places were once wealthy, and on par (or close to) London. ”

Well sure that’s always been true, but the topic of Income Equality is currently trendy.

Govco May 7, 2014 at 10:16 am

Cornwall was richer than London for longer then vice versa. It exported bronze and tin along the Atlantic seaboard and deep into the Mediteranean for thousands of years before London was knee high to a grasshopper. The ancients wrote in wonder about Cornwall, not London.

Steve Sailer May 6, 2014 at 7:29 pm

The title of the 1941 Best Picture winner about a Welsh coal-mining family, “How Green Was My Valley,” was not referring to greenbacks.

Steve Sailer May 6, 2014 at 7:31 pm

Ali G visits Wales:

Ali G: “Check dis. I is now in a coal mine which is where the Wales people used to live, underground. Millions of years ago miners lived under here before they became human beings.”

Miner: “They never lived here, they just worked here.”

Ali G: “They worked in ‘ere? What a crap job.”

mpowell May 6, 2014 at 2:16 pm

Not that I would really consider this news, but are they using a PPP adjustment on a per country basis? Of course if you compare an income in Wales to prices in London, things will look pretty bad. And ultimately, there is no one right way to measure these things.

Millian May 6, 2014 at 2:39 pm

I would ask this question, too. If PPP uses national prices, regions with below-national-average price levels can look much poorer than they really are, and vice versa. Wales is a lot cheaper to live in than London.

Douglas Knight May 6, 2014 at 3:54 pm

I can’t find the original report, but poking around the site of the resolution foundation doesn’t give me hope. Eurostat certainly does not publish a PPP for Cornwall.

To spell it out: they are pretending that everyone in Britain has to have half a house in London and half a house outside, which makes people in London look rich and people outside look poor.

David May 7, 2014 at 4:45 am

Regional PPP is all a bit rubbish since all the nice things in life are cheaper in London than Wales.

spencer May 6, 2014 at 2:54 pm

In the US in 2012 real per capita GDP
as a percent of the national average:

Worse states:…………..%

South Carolina………..74.5
West Virginia…………..71.0

Best States………..%
North Dakota…..129.1

Delaware comes in first for 4 reasons.
1. Its urban slums are in other states —Philly & Baltimore.
2.corporations making Delaware their state of incorporation boost income.
3. As a share of GDP money management is an important industry.
4. Their other big industry is chemicals that is a very high value added industry.

Actually Washington DC at 340% of the national average is the highest,
but that is distorted by people working in DC and having their output credited to DC
while they live in other states and are counted in their populations.

To a certain extent Luxemburg has the highest real per capita GDP in Europe because of the same distortions.

Therapsid May 7, 2014 at 12:59 am

“To a certain extent Luxemburg has the highest real per capita GDP in Europe because of the same distortions.”

Yes, but why does Tyler need a commentator to point this out? Is he that lazy? Or worse – is he that ignorant?

prior_approval May 7, 2014 at 7:21 am

Prof. Cowen knows all he needs to know. That is the charm being the long running general director of a donor sponsored center with the explicit goal of influencing public policy.

bartman May 6, 2014 at 2:56 pm

Delaware comes in first for 4 reasons. 1. Its urban slums are in other states

Spoken by somebody who has obviously never been to Wilmington.

spencer May 6, 2014 at 2:58 pm

P.S. BEA just published regional cost of living indices for each of the states.
This is suppose to be a new economic series that they will publish every year.
So you can get real state income data with a proper inflation adjustment.

spencer May 6, 2014 at 3:00 pm

During my career I visited many a portfolio manager in Wilmington.
The slums were never obvious to me.

yo May 6, 2014 at 3:16 pm

Perhaps an ecological fallacy, but I didn’t read the paper. Are they comparing country average ppp with income measured at the regional level, or did they do their homework and also compute regional cost of living data (seems unlikely, lot of work)?

chuck martel May 6, 2014 at 3:55 pm

As Fraulein Schneider sang in the musical Cabaret:

When I had a man,
My figure was dumpy and fat.
So what?
Through all of our years
He was so disappointed in that.
So what?
Now I have what he missed
And my figure is trim,
But he lies in a churchyard plot
If it wasn’t to be
That he ever would see
The uncorseted me,
So what?

For the sun will rise
And the moon will set
And learn how to settle
For what you get.
It will all go on if we’re here or not
So who cares? So what?
So who cares? So what?

dearieme May 6, 2014 at 4:26 pm

Presumably they’re judging how rich you are by your income not your wealth. That would give odd results in a retirement county like Cornwall, where lots of people will have a pension as income and lord-knows-what as wealth.

P.S. I don’t know how they get by-county measures of income in Britain. No small task, I imagine.

Steve May 6, 2014 at 5:13 pm

How is this news? If they have less then that is what they deserve.

farmer May 6, 2014 at 7:03 pm

teeside being poor shouldn’t be news to fans of The Smiths.
Hang the DJ!

Doug May 6, 2014 at 7:09 pm

“But the new analysis reveals that the average weekly income of someone in self-employment is 20 per cent lower than in 2008. As a result, a typical self-employed worker now earns 40 per cent less than a typical employee.”

My impression is that most full time workers are working beyond their marginal utility. I.e. most full time workers would probably accept a 10% reduction in pay for a 10% reduction in hours. But most employers frown on employees working less than the standard full work week for various reasons. It stands to reason that if people move to self-employed they’ll probably work less hard and earn less money. Overall though that could mean they’re still better off from the additional leisure.

Emma May 6, 2014 at 7:11 pm

I suspect the data they are using is from the dataset represented in this graphic:

Which given that this page:
implies they do not have regional PPP data, suggests that they are indeed making the mistake mpowell and Millian mention and computing what a (say) Welsh income will buy you at average national prices, and coming to mistaken but (for the Independent) welcome conclusions.

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prior_approval May 6, 2014 at 11:22 pm

I’m sure they meant to post in the HFT thread.

Belisarius May 7, 2014 at 3:44 am

So, the Welsh are the West Virginians of Britain? Looks like I should visit Cymru more often!

I had a Welsh friend in college who used to have this banner: “Anglo-Saxons go home, Britain for Britons.”

One of my favorite actress is the Welsh actress Joanna Page of “Gavin & Stacey” fame who was fantastically beautiful and sweet in “Love Actually” opposite Martin Freeman of “Sherlock” fame (my wife forced me to watch this with her, but I was smitten as soon as I saw Page):

chuck martel May 7, 2014 at 8:27 am

Welsh songstress Duffy is very neat as well.

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