This article today is going to be short. there’s always a lot of interest in this subject, and in two respects, it really can never be written about enough … because things change … we are in a pretty fluid world, after all.
A couple months ago I wrote about two very useful and interesting cost comparison tools online “Expatistan” and “Numbeo“. These are tools that take publicly available data along with cost of living information supplied directly by readers, to calculate net cost of living comparisons between two cities of interest to you.
Like any such system, there are always going to be flaws … if I say a bottle of beer costs a dollar and you say it costs two dollars, what does the system do. Accept your information? Accept mine? Average the two? … you can see the difficulty there.
But both systems use a “market basket” of normal living expenses to calculate a comparison and strictly by the great equalizer, time (plus some complex algorithms behind the scenes), overall any blips or errors are going to be averaged out of the system.
Things I have noted since I first wrote about these tools include the fact that overall costs of living here in the Philippines seem to be pretty stable, averaging around 40% cheaper overall than living in the US, and that price differences between US cities seem to be wider,
As experience (and database updates) increase. It seems to make quite a bit of difference which US city you chose to compare against … in other words Kansas City is a heck of a lot cheaper to live in than San Francisco (but both cost way more than Manila).
Useful tools, but the laughable part to me is, they are still very much in line with the simplistic (but absolutely brilliant) “Big Mac Index’ of the Economist.
This is actually an attempt at illustrating issues of currency exchange … under and over-valued foreign exchange rates and such. But wow, does it track very closely with the ‘real dollar’ price of a Big Mac. Been doing so for some years now, too.
Based on my US, Philippines, UK, Germany, Thailand and Japan experience (all countries I have actually lived in for a year or more, not just travelled through) … if you know the cost of a Big Mac, you pretty much know what it’s going to cost to live there.
Sounds dumb, but many brilliant ideas seem that way until people actually experience the real world.
Happy comparisons, folks.