Why Americans save so little

B: Middle-class Americans queue at food banks as US unemployment hits 38 million - BBC News - YouTube

Americans should have a habit of saving money rather than alway spend lavishly in daily life. Even the middle-class rely on food bank in recession.

A: The reality is, it’s not easy to save in America if you have low or lower middle class income. Here’s why in my opinion: although household goods are China price cheap, everything else is very expensive such as housing, taxes, medical, education, transportation. Transportation is expensive because you need a car and in most cases 2 in America. If you analyze the income of lower middle class, they have not kept up with inflation. By maintaining a middle class lifestyle such as home ownership, it has invariably pushed many into debt. Any crisis such as a pandemic can crash their finances. So, please don’t think Americans live lavishly, most middle class savings capabilities can not be measured the same way to Asian countries’ like Singapore...

public transport is only economically viable in densely populated cities. Therefore, subways exist only in major cities like Boston, New York, San Fran, Washington DC. and a few other metro cities. Most America population live in a term known as suburban sprawl which makes public transport expensive, inefficient and unpopular. Most people own a car and quite often another one for spouse or backup transport. Just a rough guide, it’s $0.58 per mile cost to operate a car and most people commute on average 2 hrs to and from work.

Me: Tax rates and take home salaries for 40 countries - Business Insider

USA: Practical tax rate: 18%
Average post-tax salary: $52,344

Denmark: Practical tax rate: 56%
Average post-tax salary: $28,227

Netherlands: Practical tax rate: 41%
Average post-tax salary: $30,562

Household Saving Rates 2018 | Global Finance Magazine

Household Saving Rates 2018
USA: 3.72%
Denmark: 5.90%
Netherlands: 6.14%

Clearly taxes are not the reason Americans save so little

List of countries by GDP (PPP) per capita - Wikipedia

When you correct for purchasing power parity (the cost of goods and services), the US by IMF estimates is ranked 10th in GDP per capita

The Netherlands is #12 and Denmark is #16

Clearly the cost of goods and services isn't the reason why Americans save so little

Your claim about a 2 hour commute is wrong too

"in the U.S., the average, one-way commute time is 26.1 minutes, according to the U.S. Census Bureau" (Study: States with the longest and shortest commutes)

That is under 1 hour a day for the average commuter

A: if you compare US tax rates to Euro countries, then it’s obviously the Euro rates are going to be higher than US because Europe’s healthcare, Education and overall welfare benefits are also better. Compare the US tax rate to Asia, it is significantly different.

I’m not sure if you live in the States and in anyone of the metro centers. I’ve worked in most of the metro cities and I know commute is easily one hour if you have a family and have to live outside the city limits. If you’re fortunate enough to live within a 1/2 hour commute, you’re either single and spend all your money on rent/mortgage or you are in the upper middle or higher class income bracket. Any decent size apartment in Boston starts at $1M USD, most families prefer to move out to the suburbs where you get more room for your money with the trade off for longer commute.

Cost of goods in US are not that expensive compared to some Asian countries because of the China prices as I have mentioned, but services are extremely expensive. Childcare for example can easily eat away a large portion of a low income earner’s salary. Then there are car services can be very expensive depending on the brand/model you drive.

Me: so why are us savings rates lower than in most of Europe despite lower taxes?

Do you think census bureau data is wrong?

Do you know what ppp gdp is?

A: I am not a professional economist who claims a deep understanding of the correct interpretations and usage of ‘ppp gdp’ and I am sure you’d agree that most people have a cursory understanding at best but claims to be subject matter experts with their faded high school economic lessons or google searches.
I am reflecting on the notion that the American saving rates are low is not due to a nationalistic character flaw like being spendthrift. This is highly inaccurate. Americans savings are low is because most families from the lower middle class on down have very little savings left after non-discretionary expenses.

Me: and I have provided data showing that that claim is wrong

A: What I want to clarify here is that the assumption that an American characteristic has a spendthrift inclination is wrong. We can certainly go down a 'rabbit hole' and get into a senseless argument of your interpretation of some site's data as to whether average commute is half hour or one hour and thus my 'claim is wrong' is a moot argument. At the end of the day, it is the understanding the phenomenon that is important, not a one dimensional view of data that you are basing your entire conclusion on. A misinterpretation can lead to misconception if you do not evaluate arguments and facts from multiple angles.

Me: If anyone else is interested, the cost per mile of a car varies depending on your assumptions

The True Cost of Owning a Car

If you buy a 2018 model,
If you drive 10,000 miles per year, a small sedan costs 55 cents per mile
If you drive 15,000 miles per year, a small sedan costs 42.3 cents per mile
If you drive 20,000 miles per year, a small sedan costs 37.1 cents per mile

However, this assumes you buy a new car. If you get a used car, it is much cheaper - consider that according to the AAA "depreciation “remains the single biggest cost of [auto] ownership, accounting for more than a third [36 percent] of the average annual cost” (How Depreciation Affects Your Car’s Value)


Editor's note:

I did try to look at some research on impulsivity/instant gratification and was unable to find cross-cultural research on the topic.