DATA: INCOME AND PURCHASING POWER OF STUDENTS IN EUROPE

How much money do students in Europe have at their disposal?

Sufficient funds are an important condition for taking up and successfully completing higher education studies. Students’ income is therefore an important aspect for the EUROSTUDENT project in order to depict the social dimension of higher education in the different EUROSTUDENT countries (see Fig. 1) [1].  On average across all EUROSTUDENT countries with available data, students’ income amounts to 1,077 Euro. As could be expected, considerable differences can be found between countries.

 figure1

How comparable are these results?

The data imply that students in some countries have better living conditions than their fellow students in other countries, especially when compared to the group of countries on the far right in Fig. 1: the average student in Norway, for example, has more than five times as much income as the average student in Poland. Students in Norway therefore seem to be in an enviable position. But is it quite that easy?

The above comparison of students’ average income is indeed not without its restrictions: although all values are depicted in Euro, not all countries were part of the Euro area at the time of the EUROSTUDENT surveys. The use of exchange rates to calculate Euro values for non-Euro countries affects not only the magnitude of students’ average income, but also the order of the depicted countries in the graph. Additionally, considerable differences in countries’ price levels may have an influence on the minimum amount of income needed by students to secure their living. For methodological reasons, a different reference value, such as a country’s per-capita-income or the poverty threshold is not easily available, as students’ income and expenditure is different from other population groups.  Students have specific expenses that others do not and the student status often confers benefits and price reductions not available to other people. Another option would be to factor in the different price levels in the countries by using purchasing power standards, however, these are only applicable and valid under certain conditions, and, in addition, not easy to grasp intuitively.

But a further option is to make reference to a homogenous product which is the same in all countries and therefore directly comparable. This is done by employing a variant of the Big-Mac-Index. By directly indicating the number of Big Macs students could, in principle, afford (Fig. 2), this measure allows a clear and direct comparison of the purchasing power of students’ income.

How many Big Macs can students afford with their income?

figure2

On average across all EUROSTUDENT countries with available data, students could afford 290 Big Macs per month. Students in Norway, Sweden and Switzerland would be able to purchase more than 400 Big Macs with their monthly income whilst students in France, Lithuania, Germany, Latvia, Estonia, and Poland could potentially buy less than 290 Big Macs. Students in Italy, the Czech Republic, and Hungary are able to buy less than 200 of these burgers each month.

We see that even if differences in the income levels still remain between the countries of the European Higher Education Area after employing the Big Mac as an indicator for purchasing power, they are clearly reduced when compared to Figure 1. To draw again on the example used above: while the average student in Norway has more than five times the amount of income available in Euro as the average student in Poland, they would „only“ be able to afford twice as many Big Macs a month. Using real purchasing power (with regard to Big Macs) instead of students’ nominal income therefore greatly reduced the variation between the countries in question. In spite of the simplicity of the indicator, the analyses show that employing the Big Mac Index can provide important information that further enhances the international comparison of students’ income.

Read more on this topic from our Intelligence Brief.

[1] The income definition applied in the EUROSTUDENT project does not only cover income gained through employment – the data also include income from students’ family and/or partner, public funding (including grants, scholarships as well as loans), and other income, e.g. grants/loans by private companies or housing benefit from the state. For reasons of comparability, the data presented in Fig. 1 and Fig. 2 refer only to students not living with parents.

 

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