Seeing figures on the median income range required for households to fall between 66 percent and 200 percent of each state’s median income (via Jayman) set me thinking about differences in monetary standards of living across the US.
Due to the wide variations in costs of living across different regions, income figures alone provide an incomplete picture. Nominally a dollar is a dollar, but the real purchasing power of that dollar not only varies over time (or, more precisely, declines over time), it also contemporaneously varies by location. Last year the Tax Foundation created a map showing the real purchasing power of $100 by state, indexed to an average national purchasing power for that same amount. Using this data in concert with median household income figures provides a seemingly reasonable measure of average monetary standards of livings across states.
It’s still an imperfect measure. The numerator here is income, not wealth, so youthful states like Utah and Alaska get a bit of an artificial boost on account of having fewer retirees than older states like Florida and West Virginia do. In geriatric states, retirees’ incomes are often modest compared to the earnings they enjoyed during the middle of their life cycles even though, optimally, their monetary standards of living are at least as high as they were when they were working full time. Despite the name, the Tax Foundation’s figures don’t take income or sales taxes into account. Additionally, these are state medians and there is a lot of intrastate variation that gets amalgamated into each statewide figure (ie, Washington west vs. east of the Cascades). And, of course, this does not take into account non-monetary intangibles like climate, population density, and the like that factor into real world assessments of how desirable a place is to live.
The following table ranks states by a monetary standard of living (MSOL) index, calculated by multiplying how far $100 goes in a state compared to the national average by the median household income in the state and then dividing that by national median income to derive an index normed to 100. A MSOL index value above 100 indicates an average living above the national average while a value below 100 indicates an average living below the national average:
|6. North Dakota||116.0|
|7. New Jersey||115.6|
|11. New Hampshire||113.7|
|17. Rhode Island||106.5|
|21. South Dakota||104.4|
|35. North Carolina||94.3|
|38. New York||93.5|
|42. South Carolina||91.6|
|47. West Virginia||87.6|
|48. New Mexico||87.0|
A map of the same. The darker the shading, the higher the MSOL:
Generally speaking, the South is relatively poor while New England and the upper Midwest are pretty well off.
Several years ago I looked at the relationship between a state’s “livability index” (calculated by looking at 44 different, pretty wide-ranging factors from things like public libraries per capita to infant mortality rates) and its estimated average IQ and found a vigorous positive correlation of .78. There is more to life than money, and that comparison suggested that the non-monetary good things in life correlated strongly with intelligence. Well, material abundance does, too. The state level correlation between MSOL and IQ is .61 (p-value = .0000003).
Parenthetically, MSOL correlates modestly with 2012 support for Obama (r = .20, p-value = .17).