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I don't know much about economy and financial measures, but was looking at a website that compares cost of living in different countries, as I am considering relocating elsewhere, but then I realized something was missing. For instance, it would not mean much to me if in India it costs me a third of what I pay here, to buy the same number of coke cans. That would be relevant only if I was paid US salary to live in India.

But what if I am getting paid salary from a source in India? In other words, it may be that in India a research assistant at a college on average earns a third of what a research assistant like me earns here in US. In that case, even if my cost of living there is much less, so is my salary.

So is there a measure that combines these two information? I know it can't be "purchasing power" because that's used more for inflation over time....

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    FWIW I thought about the close votes before answering and thought this was on-topic because it does directly relate to how an individual should think about money in different countries.
    – GS - Apologise to Monica ♦
    Aug 31, 2016 at 13:06
  • I wanted to post in the economics sections first but it said it was for professionals and academics, and given that this had personal significance as I am considering relocating, I thought this forum would be better. But where else can this be posted?
    – Joseph Figaro
    Aug 31, 2016 at 19:29
  • I've posted on meta: meta.money.stackexchange.com/questions/2357/… Note that there's no guarantee of there being a site on the StackExchange network to host your question - you could be unlucky and have it fall between two sites. That said, I think your question might be ok on economics if it stays closed here.
    – GS - Apologise to Monica ♦
    Aug 31, 2016 at 21:22

2 Answers 2

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The key term you're looking for is "purchasing power parity", which considers the local prices of goods and services when making comparisons between countries.

For example, you can look up the GDP by PPP per capita to get a sense of much people on average incomes can buy in each country. Of course, average incomes may not be too relevant to your own specific circumstances, but nonetheless you can look at the PPP data itself to figure out how to translate specific numbers between two currencies.

However, note that the "basket" of goods used to calculate this measure itself has a significant impact on the results. Comparing prices of food and electronic equipment respectively will often give very different answers.

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    By the same token as your last sentence, taking an 'average' of the country's wage is not as good of an indicator as actually looking at salaries in your field / offers you've been given for employment. PPP, and cost of living comparisons, should be more like initial starting points, not the end decision maker. Who cares if the average salary in a country is 10k, if you've been offered 50k? Who cares if the average rent is 100 / month, if you want to live somewhere that costs 600?
    – Grade 'Eh' Bacon
    Aug 31, 2016 at 12:33
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    @Grade'Eh'Bacon I've added a note to address the wage point. I agree about rent etc in principle, but I think rent it's less of an issue as it's feasible to shop around for somewhere to live, whereas it isn't to change your career or skills.
    – GS - Apologise to Monica ♦
    Aug 31, 2016 at 14:51
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But what if I am getting paid salary from a source in India? In other words, it may be that in India a research assistant at a college on average earns a third of what a research assistant like me earns here in US. In that case, even if my cost of living there is much less, so is my salary.

There are sites that provide a good guidance for what the average salary for an profession with x years of experience would be. Of course some would get paid more than average. So you can try and make a logic, if in US say you are being paid more than average, you would be paid more than average elsewhere. Plus If moving from Developed to Developing country, one has the Advantage of positive pedigree bias.

There are also websites that would give the Purchasing Power Parity for quite a few currency pairs.

The Real difficulty to find is whether the Lifestyle you have in a specific country would be similar in other country. If you compare like for like it becomes slightly skewed. If you compare equivalence, then can you adjust.

A relevant example my friend in US had a Independent Bungalow in US. It was with Basement and attic, 2 levels of living space with 4 bedroom. He shifted to India and got a great salary compared to normal Indian salary. However this kind of house in India in Bangalore would be affordable only to CEO's of top companies. So is living in a 3 room apartment fine? There are multiple such aspects.

Drinking a Starbucks coffee couple of times a day is routine for quite a few in US. In India this would be considered luxury. A like for equivalent comparison is "One drinks 3-4 mugs of Coffee" in US, and average Indian drinks "Tea/Coffee 3-4 mugs". In India the local Tea / Coffee would be Rs 10 - Rs 20. A Starbucks would come with starting price of Rs 150.

The same applies to food. A McBurger in India would be around Rs 100. The Indian equivalent Wada Pav is for Rs 10. A Sub Way would be Rs 150. A Equivalent Mumbai Sandwich around Rs 25. I personally am picky about food, so it doesn't matter where I go, I can only eat specific things, which means I spend a huge amount of money if I am outside of India.

When I was in US, I couldn't afford a maid, driver or any help. In India I have 2 maids, a cooking maid and a driver. Plus I get plumber, electrician, window cleaner, and all the help without costing me much. Things that I absolutely can't dream in US.

My colleague in UK preferred to stay in a specific locality as it has a very good Church. So if its important, one may find few good ones in India if one is Roman Catholic, if one follows Lutheran, Greek Orthodox, tough luck.

Citizenship: Does it matter ... A foreign national may never get an Indian citizenship. Children don't qualify either unless both parents are Indian.

Health Care: Again is quite different. One may feel Health care in US is not good or very expensive ... but there are multiple aspects of this.

So in essence its very broad there is traffic, cleanliness, climate, culture, etc ...

PS: A research assistant in India is poorly paid, because colleges don't have funds. Research in fundamental science is quite low. Industry to university linkages are primitive and now where close to what we have in US.

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