How Much Does it Really Cost to Live in the Worlds Major Cities?

There are surveys about literally everything you can think of. Whatever it is, someone will have conducted a survey about it at some point. Some of the most notable surveys which are updated every year are the surveys that show the worlds most expensive cities.

The survey is designed to display the ranking of cities in the order of how expensive they are for ex-pats to live in. In 2009 one of the main surveys of this kind showed Tokyo in Japan to be the most expensive city in the world, whilst the same survey in 2010 now suggests Luanda in Angola is the most expensive city in the world.

Where do the results come from and is there a flaw?

The results of these surveys are calculated by changing the local costs into Dollars. This in itself if a major flaw, and one of the main reasons why many academics discount the results as irrelevant.

By calculating the figures in this way changes in living costs are reflected by the peaks and dips in world currency, rather than having anything to do with rising costs in the measured cities.

In other words these results do not give a fair reflection of actual living costs in each city. Even if prices remain completely stable in a city, it may still become more expensive according to these surveys because of a fluctuation in the Dollar.

To use the UK as an example, in recent years the pound has lost a great deal of value against the Dollar and the Euro. This makes it look on paper as though it has become cheaper for people travelling from the U.S or other parts of Europe. However as many disgruntled people living in UK cities will tell you, living costs have done anything but become more affordable.

Many major buys including petrol, groceries, and utilities have actually increased in cost.

A better way?

Although slightly unconventional, Apple have actually come up with probably a more accurate way of measuring a city’s affordability. The iPod Index as they are calling it, basically works out how many hours of work it would take someone to be able to afford the iPod MP3 player.

When you look at this theory in a little more depth it does actually make some sense. For example, with the average wage in the UK being roughly $10 (ish), buying an iPod costing $100 would take someone roughly ten working hours.

Somebody working in a country like India would probably have to work nearer 100 hours plus to be able to afford the same MP3 player.

Although not exactly accurate it does provide a slightly clearer insight into how far your money would go in a particular city in the world.

Only an indication

One of the major flaws with all surveys is that they can only ever give a minor indication of something. Regardless of whether it is a survey about the richest or most expensive country in the world, or whether it is about what women thought about a hair product.

An advert that tells you that 89 out of 100 women loved product X, well great! If they had asked another 100 women the same question they may have found out of that 100 women only 45 loved it.

Surveys can only ever give a guide, and not a definitive result. That is why this particular survey that shows Luanda as the most expensive city in the whole world should probably be taken with a large pinch of the salty stuff.

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