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  • Relatively Expensive

    Posted by James R. Rummel on February 16th, 2012 (All posts by )

    In this post, I link to a brief news item that discusses the most expensive cities in the world to live. knirirr was kind enough to leave a comment.

    Interesting – I was surprised to see London so low down the list.

    knirirr makes his living as an academic. He works at a prestigious college in the United Kingdom. Even adjusted for different currencies, his pay lags about 25% behind what a comparable American prole slaving in the Ivory Tower would earn. And professor salaries in the UK are considered to be pretty posh compared to most of the world.

    If anyone is wondering as to the reason for this disparity, it is because the US government has guaranteed loans that college students take out to finance their educations. With all that money coming in, centers of higher learning have applied themselves to spending the wealth. Hence, academics in America earn significantly more than their foreign cousins.

    There is a lot more to the issue, enough to warrant a few other posts on the subject. But the main reason I mention it here is that knirirr’s comment got me to thinking about disparity of income.

    How would those cities on the list fare if one factored in the per capita GDP of the countries where they are located? According to this list, a few revisions would have to be made.

    Perhaps surprisingly, cities in the top spots would still be even more expensive places to live if one considers average per capita income.

    According to the article, the cost of living in Zurich is 176% compared to New York City. This means Zurich is the most expensive city to call home in terms of money spent to live there. But since the average wage of the Swiss people is five to ten percent less than citizens of the United States, the cash shelled out for rent and food would take a greater percentage of their pay checks.

    The same goes for the number two city. It might cost 166% to live in Tokyo, Japan than it would to dwell in New York, but the average Japanese citizen earns about 72% of the wage that the average American takes home. If GDP was included in the calculations, then Tokyo would climb above Zurich so far as relative expense was concerned.

    The real shakeup, of course, comes at the very bottom of the list. Karachi, Pakistan is supposed to be the least expensive place to live as one could make a home for only 46% of the cost to live in New York. But considering that the average yearly wage in Pakistan is about 5% of the average wage earned in the US, and suddenly it is obvious that the vast majority of Pakistanis can only think of living there to be an impossible dream.

    (Cross posted at Hell in a Handbasket.)

     

    9 Responses to “Relatively Expensive”

    1. Whitehall Says:

      I must of missed the point:

      “It is obvious that the vast majority of Pakistanis can only think of living there to be an impossible dream.”

      Between 13 and 15 million Pakistanis live there so it can’t be impossible.

      Miserable, yes; impossible, absolutely not.

    2. Michael Kennedy Says:

      13 to 15 million may still qualify to be the opposite of the “vast majority.” And think of your security costs. In Mexico, the cities like Guadalajara have high walls along the streets with broken bottles mortared into the top of the wall. The wall is broken only by a large (horseman height) door with a smaller door in it. Inside the door, the center of the building or complex may be beautiful with fountains and trees but it is walled off from the hoi polloi outside. In some areas, the outer wall is lined inside with shops owned by the residents, some of which offer luxury goods. When the shops close, the doors close and the building is like a fort.

      I suspect that Pakistan is similar.

      If our economy collapses through economic incompetence, we may have seen the last of wide open peaceful communities with large front yards. Many European cities look the way they do, which can be charming, because they were built in an earlier era when security required similar construction.

    3. dearieme Says:

      Why worry about London? Anyone who had a free choice in the UK would surely choose Oxford or Edinburgh.

    4. Bill Brandt Says:

      The last time I was in Europe, 1992, I stopped in Helsinki where a beer at an outdoor cafe was about $7. Americans traveling over there always mention the simple costs – like restaurants and hotels.

      A friend whose family is from Norway mentioned that on a ferry from Finland a lunch was $80 – and we aren’t talking Michelin 5 star on a ferry boat.

      If the salaries are actually less over there – adjusted for currencies, how do people simply entertain themselves?

      Life seemed so simple 40 years ago in Germany where the DM was about 2.5 to a dollar.

      You are right about the government messing up the costs of education. Every time it steps in to “help” us it is like a bull in a china shop.

      As someone said (here on this blog I believe) if the loan guarantee is for up to $100,000 a school would be sure to get $100,000.

      Then the housing market, I guess we could go on and on about how the government ” helps” us.

      But for, say a Swiss, I don’t see how they can live even fairly comfortably – or a Japanese in Tokyo.

    5. Javahead Says:

      It’s been a few years since I had much free time in the EU part of Europe other than a few hours in transfer airports. But I noticed that most places I visited before that (late ’90s through 2005) had higher dining-out prices than comparable places in the major US cities I was also visiting during the same time frame.

      When I was working in the UK and Ireland, I got the impression (confirmed by coworkers) that on average people ate out a bit less than folks do in the US. Low-end takeaway food wasn’t too different, but the rule-of-thumb I used in the UK was that most restaurant meals cost about the same number of pounds that I’d expect to pay in dollars in the US – given the exchange rate, >1.5 times more. Though slightly mitigating things was the lower expected tipping level.

      I didn’t think that Cork and Dublin, where I spent the most time in Ireland, were a lot more expensive than San Jose or San Francisco, the major California cities closest to me. But my Irish coworkers felt they *were* expensive, and complained about how fast prices had jumped during the Celtic Tiger years.

      Scandinavia (mostly Sweden, for me) seemed really expensive even compared to the UK. And they have insanely high taxes on “sin” items like alcohol. I remember asking a friend who was having a low-alcohol beer with dinner if he intended to return to work, and having him point out the difference in cost between the low- and “high” (maybe 5-6%) alcohol brews.

      Food in Japan, on the other hand, can be quite affordable, if you’re willing to eat as the locals do. And, on average, Japanese in Tokyo seem to eat out a lot more than folks do in the UK. Ditto Korea, Taiwan, and Hong Kong. Of course, these are all areas with extremely high relative prices for real estate, gasoline, and cars, but at least you can afford to eat out.

      Here in the US, food prices in markets are generally quite low compared to most of the developed world. Restaurant prices vary greatly by location, but away from the downtown core even our priciest cities seem reasonable compared to the prices I saw in the UK. (I spent most of my working time in Cambridge, Milton Keynes, and London, but short visits to other cities didn’t show much variance from Cambridge or Milton Keynes pricing)

      Looking at jobs advertised, and listening to coworkers discussing their lives I got the impression that US salaries in my area (embedded SW development) averaged rather higher than they did in most of western Europe. Though colleagues in Serbia were planning to move to Germany to take advantage of the higher salaries there, they were fretting about the expected higher cost of living – and the salaries they were hoping to get were still lower on average than the US.

      This has been a long ramble, I’m afraid. To summarize – “cost of living” is relative to income level, and expectations. And the relative weight of components like housing, food, transportation, and medical care can vary widely from place to place.

      Where’d I live if not in the US? I’m not certain – of the place I’ve been, perhaps Cork, Cambridge, or Hong Kong. But I’d expect to make changes in my lifestyle for any of the three. I don’t think any realistic salary would be enough to make me want to live in London, though it’s a great place to visit. And it would take an extremely unrealistic salary to make me eager to live in Milton Keynes, even if it is quite cheap for the UK.

    6. knirirr Says:

      Oxford and Edinburgh are certainly more pleasant places to live than London, although my experience of living in the latter city is fortunately much more limited.
      One problem with Oxford is that there’s very little space to park in the centre (where most of the university departments are) and spaces tend to be reserved for important bureaucrats. The park and ride service is not great, and I am told that it is inferior to that of Cambridge. I estimate the cost of parking in an Oxford park and ride and taking the bus in to work to be about £800 per year (not including car fuel at around £1.35 per litre).

    7. T.K. Tortch Says:

      I attended Edinburgh University in the late 80′s & found prices higher for many things but not distressingly so. Cooked for myself, mostly; store-bought food wasn’t too expensive, and I wasn’t living at the beans-on-toast level of penury so I bought decent food. Didn’t eat out too much & when I did it was at places that were a bit fancier, so I expected it to be pricier.

      One thing I did notice was that the local analogs to U.S. fast food seemed pretty expensive for what you got. And I never bothered with the abominations served up by local attempts to do U.S. style pizza (cocktail corn on a pizza? Really?) or worse, Mexican food.

      The Continent was more expensive everywhere it seemed, but I was traveling grubby student class so I could manage.

      Once met two (very, very swell) Danish girls on a train running from Paris to Nice; we hit it off. When I said I hadn’t visited any of the Northern / Scandi countries yet & would like to see Denmark, they both blurted out at the same time “you can’t afford it!!”

    8. dearieme Says:

      But, Knirirr, in Oxford one cycles.

    9. knirirr Says:

      But, Knirirr, in Oxford one cycles.

      When I used to live in an area that made it convenient to ride to work (I no longer do) my bicycle was stolen. Apparently such thefts are on the increase again.