Tuesday, July 4, 2017

Real GDP per capita by state

(To the chess players following my blog: this is my only post that isn't about chess. I will get back to forecasting top tournaments shortly)

In the US, we have 50 economic laboratories (or states, as normal people call them) in which to conduct policy experiments. But until recently, it was difficult to assess the results. This is because prices vary enormously across the country. In my personal experience, $1000 in Kirksville, Missouri will buy a lot more than $1000 in Seattle, Washington. As a result, incomes are not directly comparable across states and regions. If average income in State X is $50,000 while it's $40,000 in State Y, we shouldn't assume that State X is richer. If everything in State X is twice as expensive, then its residents actually have less buying power.

So the price level in a state matters, and if we don't account for it, then our results might be misleading. Fortunately, GeoFRED now has price data from all 50 states. The Regional Price Parity Index is scaled so that it equals 100 for the average across all the states. I combined this with data on state GDP and population. The result is GDP per capita data that is adjusted for the state's price level. Here are a two maps with the results for 2015.




And here is the table with the numbers. The richest state is...Washington D.C., which isn't a state. The state with the highest real GDP per capita is North Dakota. Missouri is around the middle of the pack. There is a huge amount of variation across states. North Dakota's real GDP per capita is nearly double that of Mississippi. Adjusting for state price levels can make a large difference. For example, in nominal dollars, Hawaii appears to be doing well, but once the high cost of living is factored in, it is actually one of the poorer states.

Rank    Real GDP PC  State
1          154,421.3373   District of Columbia
2          80060.5584     North Dakota
3          72652.66931   Delaware
4          69851.81862   Wyoming
5          68527.06189   Alaska
6          67302.29894   Massachusetts
7          66127.30755   Nebraska
8          65776.80559   Connecticut
9          63491.70446   New York
10        62362.12019   Iowa
11        62209.54228   South Dakota
12        61205.92307   Minnesota
13        60680.76384   Texas
14        60324.22161   Illinois
15        59490.66586   Washington
16        58668.9758     Ohio
17        57786.80952   Kansas
18        56566.837       Pennsylvania
19        56347.08586   California
20        56281.47129   Louisiana
21        56165.73898   Virginia
22        56162.43017   Wisconsin
23        55740.34301   Maryland
24        55720.95019   Colorado
25        55696.53155   New Jersey
26        55581.05966   Indiana
27        54604.03253   North Carolina
28        54233.0421     Oregon
29        53946.792       Missouri
30        53522.22254   Oklahoma
31        53412.85035   Rhode Island
32        53408.90286   Tennessee
33        53177.80317   New Hampshire
34        53101.21558   Georgia
35        51397.26629   Utah
36        50750.32633   Michigan
37        49917.14963   Nevada
38        48950.75208   Kentucky
39        47633.61484   Vermont
40        47604.77343   Hawaii
41        47473.56822   New Mexico
42        47465.52086   Alabama
43        46856.86443   Montana
44        45662.75954   South Carolina
45        45598.63808   Arkansas
46        44836.66775   West Virginia
47        44438.22669   Arizona
48        44004.59498   Maine
49        43877.81112   Florida
50        42403.47641   Idaho

51        41085.36712   Mississippi

Sources: 
Regional Price Parities: All Items by State (Index) from GeoFRED
Resident Population by State (Thousands of Persons) from GeoFRED
Total Gross Domestic Product by State (Millions of Dollars) from GeoFRED
The maps were created using Google's Fusion Tables

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