This post is part two, of a three part series on consumerism in France and America. You can find part one here. Come back next Monday for part three, or better yet sign up for my feed to be sure not to miss it!
France’s attitude towards consumerism is obviously different from that of the United States. Americans simply have more disposable income than French people with which to buy things… or do they?
When we talk about disposable income we can also talk about purchasing power, which is another way of saying ‘the money that we have to buy things’. Purchasing Power Parity (PPP) measures what your money will buy in different countries; more exactly how much the same thing costs in different countries. A popular example is the Big Mac example– if a Big Mac costs €4 in France, but $3 in the United States, the PPP is €4/$3. The problem with this system is finding the same things in different countries to use as a comparison; while we might have the same brand of shampoo here in France and the United States, we might not find it in China. Another problem is when comparisons are made between services, not goods. Countries with socialized programs will obviously pay less for services like health care than countries without.
It’s incredibly difficult to find specific comparisons between the United States and France as to purchasing power. Be aware then that the following is anecdotal, from myself and my experiences but also from many sources of advice for ex-pats, both French and American.
Everyday needs (food, clothing, books etc) are generally more expensive in France than in the United States.* This is partly due to the TVA (taxe de valeur ajouté) or sales tax which is 19.6% and partly due to the fact that most food is still produced within France, entailing higher labor costs. The TVA finances the things that are less expensive in France than the United States, like health care and education.
Rents or mortgages are roughly equivalent to the United States. In more expensive areas like Los Angeles or Paris it is going to cost more to house yourself than in a cheaper area. Gas costs more than twice as much in France. When we were in the United States gas averaged at €.65 per liter whereas here it costs €1.40 per liter.
I think that the biggest difference comes down to appearances. My husband thinks that Americans have more money than French people because it appears that Americans have more money than French people. He’s not the only one. I taught a university class on American Culture for six years. I started every year by asking my students their favorite American stereotypes. Inevitably they said that all Americans are rich. Part of this comes from TV, but part of it comes from the plethora of shopping malls and credit cards.
American life is financed on credit. There are more and more credit cards being released every day- I recently saw an ad for a design your own credit card, the selling point being that you could choose the color of the card as well as the rewards. Credit cards are not in wide use in France, due to several factors.
First, the French have a long and strong history of saving up for something, and then buying it. In fact the French save approximately 16% of their income, far more than in other European countries. Second, when a credit card might be used in the United States, for an online transaction for example, the French will use their debit card, which has a Mastercard or Visa logo. Third, credit cards are quite expensive to have; they can cost between €109 to €228 a year just in fees. Lastly, many French people rely on revolving or open lines of credit for their credit needs.
So there’s a brief comparison of credit cards and credit in France and America. But what about the other reason that Americans seem to have more disposable income than the French- their shopping habits? Stayed tuned for two different interpretations of the phrase ‘The customer is always right‘ next Monday!
*Food is generally less expensive than in Northern European countries, although more expensive than in Southern European countries.
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{ 5 comments }
That is neat. I remember buying groceries when I came back to the US. I took out $40 to pay for them and they only cost me $20. I couldn’t believe how cheap they were!
Great series! Credit certainly does allow Americans to look richer than they really are. It’s interesting what a vicious cycle is created. Because we see the results of everyone else living on credit, we feel poor and use more credit! Do you feel that there is less “keeping up with the Jonses” in France? Or is it just expressed in different ways?
The French save 16% of their income? That is significant! Especially considering the amount they spend on tax. (Here in PEI, Canada we pay 10% in provincial tax and 5% in federal tax). Even though it may not appear to be the case, I’d guess that the average French family probably has more wealth than the average American family due to the large sum of debt most Americans have.
Thanks for you kind comments on my recent post! I needed a little TLC 🙂
Re: French saving rate
An un seen factor is that the french often finance their houses/apartments with a 15 to 20 year mortgage ( although this is changing) but they end up owning their houses faster and for less interest cost than north americans with 25-30+ year mortgages. From my anectodal evidence, their equity in their homes is therefore larger than north-americans who have easier access to credit and an urge to purchase a larger house more often.
@anonymous,
That’s a good point. The French often expect to stay in the house or apartment they buy forever- they don’t really think of ‘starter houses’ like we do. Although this is changing as you said.