Isn't the cost of living different there?

May 30, 2008 9:02 AM

Why are salaries in different nations stated in their US dollar equivalents in news programs? Are there any news programs or websites that show relative purchasing power in different countries?

On the NBC nightly news last night, one story discussed how Iraqi widows were getting $41 a month government pension (when they could get it). However, I have no idea what that really means, because I don't know what anything costs in Iraq. Dollar values in these sorts of stories seem to be used for their shock values, of "Oh, look how little they're getting!" but I get the impression sometimes that this is not really the case, and going by the cost-of-living where they are, they are making more than enough money to even be able to provide for their extended families.

Does something like the Consumer Price Index exist for every country, and if not, what could I use to estimate how far $100 would go in a variety of developed/developing/3rd world nations?

posted by that girl to society & culture (3 comments total)

The Economist Big Mac Index has attempted to measure and compare the purchase power of local currencies over the years. I think however you are expecting too much analysis from a television news report, about anything.
posted by thomas144 at 9:09 AM on May 30, 2008

Okay, maybe I am expecting too much analysis, but not only do they do very little analysis, they seem to go the opposite direction into sensationalism. But I suppose that's The News for you.
posted by that girl at 10:13 AM on May 30, 2008

The truth is that it's incredibly hard to compared the buying power of different currencies, because people spend money in different ways in different places, there are wide currency fluctuations AND wealth is a very subjective thing.

Most Americans spend a large part of their earnings on a home, whether it's a mortgage payment, rental fees or just property tax. Over here in Poland, most people own their flats, so they're likely to spend much less. On the other hand, 'luxury' (and by luxury, i mean anything outside of the basics like food and off-brand clothes) items are quite expensive in comparison to most of the EU, so they're likely to spend more of their salaries on that.

The reason luxury goods here are expensive is because of low sales and a very strong zloty in the past 3 years, which should push down the price of goods but in practice has been ignored by retailers.

Most of all, though, wealth is dependent on context. Take someone who lives in rural Western Virginia and is considered 'well off', send them to NYC and suddenly they're very poor. Send them to rural Romania and they're gonna look like moneybags.

Also, to answer your last question: try the Purchasing Power Parity method.
posted by jedrek at 10:56 AM on May 30, 2008