Accessible Version
A Comparison of Living Standards Across the States of America, Accessible Data
Figure 1. Relationship between income per capita and welfare
Figure 1 is a scatterplot showing the relationship between the normalized levels of welfare and income per capita for every state of the United States in 2015. Each dot represents a state and is labeled with the state that it represents. The vertical axis is the level of welfare normalized to the Connecticut level. Therefore, any value lower than 1 on the vertical axis represents a state that has a lower level of welfare than Connecticut, while any value higher than 1 represents a state with a higher level of welfare than Connecticut. The horizontal axis is the level of income per capita normalized to the Connecticut level. Because Connecticut is the state with the highest per capita income level, the maximum value on the horizontal axis is 1.
The graph shows a positive correlation between the levels of welfare and income per capita, which we calculate to be equal to 0.80. This shows that richer states tend to have higher living standards than poorer states. However, deviations between the two measures are often large. For instance, Minnesota has 24.0 percent lower income per capita than Connecticut, but welfare in Minnesota is 7.6 percent higher than in Connecticut.
Sources: The welfare level for every state is derived through the authors’ calculations and normalized by the corresponding value in Connecticut. In particular, we quantify the welfare differences across states by computing how much spending must change in all ages in the state with the highest personal income per capita, Connecticut, to make an unborn agent under the veil of ignorance indifferent between living her entire life in Connecticut and any other state. The dashed line is a 45 degree line where welfare coincides with income per capita. Real personal income per capita is calculated based on releases of the Bureau of Economic Analysis: “SAINC1 Personal Income Summary: Personal Income, Population, Per Capita Personal Income,” 2012-2017 Personal Income Data, U.S. Bureau of Economic Analysis, Web. October 2019; “Personal Consumption Expenditures” from: “Table 2.3.4. Price Indexes for Personal Consumption Expenditures by Major Type of Product,” 2012-2017, with 2012 as base year, U.S. Bureau of Economic Analysis, Web. October 2019. Values for income per capita refer to five-year averages between 2012 and 2017.