While the U.S. economy sails along on a cloud, Japan is mired in an economic pit. Yet by traditional measurements we spend every last cent we can get our hands on, while Japan consistently has a high rate of personal savings. If we are not saving and investing, how come we are doing so well?

A new study from the Center for the Study of American Business says those traditional measurements of per capita savings leave some important things out.

Investment in human capital, or money spent on education, is not included in the savings rate -- but this is a difficult investment to quantify since it should include on-the-job training and, perhaps, even some child-rearing costs.

• However, confining the education investment just to schooling, between 1970 and 1994 the U.S. devoted 6.5 percent of gross domestic product to schooling, compared to 4.1 percent for Japan.

• In 1995, the U.S. spent close to $8,000 on each student, while Japan spent just $5,000.

• The CSAB says that consumer durables should be included as investment -- items such as cars, furnishings and appliances.

• Also, military spending is a form of investment since it provides not only current protection, but protection in the future as well.

By such measurements, the U.S. comes out on top. That's partially because the U.S. leads the world in purchasing consumer durables and we spend more on the military than any other nation.

Source: Macroscope, "Our Investment 'Problem,'" Investor's Business Daily, June 10, 1999.