Mr Gordon guesses that one-third of the discrepancy between Europe's productivity and its GDP per head, relative to America's, represents freely chosen leisure. ... The huge cost of keeping 2m people in American prisons (a far bigger proportion of the population than in Europe) also bolsters America's GDP relative to Europe's, but not its welfare. ... [S]ubsidies to suburban motorways and a starving of public transport [lead] to higher spending on roads and energy, and hence higher GDP. In Europe the convenience of more compact cities and frequent train and bus transport does not count towards GDP figures.
Taking account of how Americans waste a chunk of their income on heating, air conditioning, prisons and the like, while also attaching value to Europe's superior public transport, Mr Gordon suggests that perhaps half of the current gap in living standards between America and Europe, as measured by GDP per head, is illusory. Add in the value of their extra leisure time and Europe's living standards are now perhaps only 8% behind America's, he suggests, not the 23% suggested by official data.