Cost of living

Cost of living is the cost of maintaining a certain standard of living. Changes in the cost of living over time are often operationalized in a cost-of-living index. Cost of living calculations are also used to compare the cost of maintaining a certain standard of living in different geographic areas. Differences in cost of living between locations can also be measured in terms of purchasing power parity rates.

Enfrentamientos en Puente Presidente Ibáñez
Protests in Aysén due to the high cost of living in Patagonia

Cost-of-living adjustment (COLA)

Employment contracts and pension benefits can be tied to a cost-of-living index, typically to the consumer price index (CPI). A COLA adjusts salaries based on changes in a cost-of-living index. Salaries are typically adjusted annually. They may also be tied to a cost-of-living index that varies by geographic location if the employee moves. In this later case, the expatriate employee will likely see only the discretionary income part of their salary indexed by a differential CPI between the new and old employment locations, leaving the non-discretionary part of the salary (e.g., mortgage payments, insurance, car payments) unmodified.

Annual escalation clauses in employment contracts can specify retroactive or future percentage increases in worker pay which are not tied to any index. These negotiated increases in pay are colloquially referred to as cost-of-living adjustments or cost-of-living increases because of their similarity to increases tied to externally determined indexes. Cost-of-living allowance is equal to the nominal interest minus the real interest rate.

Consumer Price Index (CPI)

When cost-of-living adjustments, negotiated wage settlements and budgetary increases exceed CPI, media reports frequently compare the two without consideration of the pertinent tax code. However, CPI is based on the retail pricing of a basket of goods and services. Most purchases of that same basket require the use of after-tax dollars—dollars that were often subject to the highest marginal tax rate. Consequently, the COLA will necessarily have to exceed the CPI inflation rate to maintain purchasing power.[1]

The widely recognized problem known as bracket-creep can also occur in countries where the marginal tax brackets themselves are not indexed — COLA increases simply place more dollars into higher tax rate brackets. (Only under a flat tax system would a percentage gain on gross income translate into a comparable inflation-offsetting gain at the after-tax level.)

Some salaries and pensions in the United States with a COLA (they vary by type) include:

Pensions in Canada with a COLA include:

Social Security benefits

For 2018, the Social Security cost-of-living adjustment ("COLA") is 2.0% (a significant increase over the 0.3% figure used for 2017). The maximum Supplemental Security Income ("SSI") benefit will go from $735 to $750, while the maximum SSI payment for a couple will go from $1,103 to $1,125. The estimated average monthly benefit for a disabled person will increase from $1,173 to $1,197. The estimated average monthly benefit for a retired person will increase from $1,377 to $1,404. The presumptive Substantial Gainful Activity (“SGA”) threshold will increase from $1,170 to $1,180 for non-blind individuals, but from $1,950 to $1,970 for blind individuals. The Trial Work Period (“TWP”) monthly amount will increase from $840 to $850. The amount of earnings needed for a worker to obtain a “quarter of coverage” or “credit” will increase from $1,300 to $1,320. Maximum taxable earnings under the Social Security OASDI program will go from $127,200 to $128,700.[3]

In 2019, Social Security benefits increased by 2.8 percent the largest cost-of-living adjustment (COLA) in seven years.[4]

Worldwide Cost of Living Survey

The Economist Intelligence Unit produces a semi-annual (twice yearly) worldwide cost of living survey that compares more than 400 individual prices across 160 products and services. They include food, drink, clothing, household supplies and personal care items, home rents, transport, utility bills, private schools, domestic help and recreational costs.

The survey itself is an internet tool designed to calculate cost-of-living allowances and build compensation packages for corporate executives maintaining a western lifestyle. The survey incorporates easy-to-understand comparative cost of living indices between cities. The survey allows city-to-city comparisons, but for the purpose of this report all cities are compared to a base city of New York City, which has an index set at 100. The survey has been carried out for more than 30 years.

The most recent survey was published in March 2017. Singapore remains the most expensive city in the world for the fourth year running, in a rare occurrence where the entire top five most expensive cities were unchanged from the year prior.[5] Sydney and Melbourne have both cemented their positions as top-ten staples, with Sydney becoming the fifth most expensive, and Melbourne becoming the sixth. Asia is home to more than five most expensive cities in the top twenty but also home to eight cheapest cities of the cheapest ten.

Other uses

Stipends or extra pay provided to employees who are being temporarily relocated may also be called cost-of-living adjustments or cost-of-living allowances. Such adjustments are intended to offset changes in welfare due to geographic differences in the cost of living. Such adjustments might more accurately be described as a per diem allowance or tied to a specific item, as with housing allowances. Employees who are being permanently relocated are less likely to receive such allowances, but may receive a base salary adjustment to reflect local market conditions.

A cost-of-living allowance is frequently given to members of the U.S. military stationed at overseas bases if the area to which a service member is assigned has a higher cost of living than the average area in the United States. For example, service members stationed in Japan receive a cost of living allowance of between $300 and $700 per month (depending on pay grade, years of service, and number of dependents), in addition to their base pay. This additional pay is non-taxable.

See also



  1. ^ "CPI Home : U.S. Bureau of Labor Statistics". Retrieved 2019-09-30.
  2. ^ a b Flanagan, Tammy (2006-09-08). "COLA Wars". National Journal Group. Retrieved 2008-09-23.
  3. ^ "Social Security Benefits to Increase in 2018 | Social Security Matters". Retrieved 2018-01-15.
  4. ^ Edleson, Harriet. "Social Security COLA Increase for 2019". AARP. Retrieved 2019-04-03.
  5. ^ "Singapore Maintains Top Spot as World's Costliest City". Bloomberg. 2015-03-03.

External links

Arundhati Roy

Suzanna Arundhati Roy (born 24 November 1961) is an Indian author best known for her novel The God of Small Things (1997), which won the Man Booker Prize for Fiction in 1997 and became the biggest-selling book by a non-expatriate Indian author. She is also a political activist involved in human rights and environmental causes.

Assistant United States attorney

An assistant United States attorney, colloquially known as a federal prosecutor, is an official position working for the federal government of the United States in the U.S. Department of Justice, assigned to a local district of the U.S. Attorney's Office under the supervision of the regional U.S. Attorney. In 2008, there were approximately 5,300 assistant United States attorneys employed by the U.S. Government. Though colloquially known as "prosecutors", not all assistant U.S. attorneys work in Criminal Divisions, and may work in Civil, Appellate, or other divisions. As of 2014 they earned a starting base salary of $50,287, adjusted significantly for local cost of living.Assistant United States attorneys working in a criminal division generally handle large case loads, however, as most federal prosecutions end in plea bargains, they will typically only try between two and six cases annually.

Consumer price index

A Consumer Price Index measures changes in the price level of a weighted average market basket of consumer goods and services purchased by households.It is usually calculated and reported by the Bureau of Economic Analysis and Statistics of a country on a monthly and annual basis. International organizations like the Organisation for Economic Co-operation and Development (OECD) report statistical figures like the Consumer Price Index for many of its member countries. The CPI is a statistical estimate constructed using the prices of a sample of representative items whose prices are collected periodically. Sub-indices and sub-sub-indices are computed for different categories and sub-categories of goods and services, being combined to produce the overall index with weights reflecting their shares in the total of the consumer expenditures covered by the index. It is one of several price indices calculated by most national statistical agencies. The annual percentage change in a CPI is used as a measure of inflation. A CPI can be used to index (i.e. adjust for the effect of inflation) the real value of wages, salaries, and pensions; to regulate prices; and to deflate monetary magnitudes to show changes in real values. In most countries, the CPI, along with the population census, is one of the most closely watched national economic statistics.

The index is usually computed monthly, or quarterly in some countries, as a weighted average of sub-indices for different components of consumer expenditure, such as food, housing, shoes, clothing, each of which is in turn a weighted average of sub-sub-indices. At the most detailed level, the elementary aggregate level, (for example, men's shirts sold in department stores in San Francisco), detailed weighting information is unavailable, so indices are computed using an unweighted arithmetic or geometric mean of the prices of the sampled product offers. (However, the growing use of scanner data is gradually making weighting information available even at the most detailed level.) These indices compare prices each month with prices in the price-reference month. The weights used to combine them into the higher-level aggregates, and then into the overall index, relate to the estimated expenditures during a preceding whole year of the consumers covered by the index on the products within its scope in the area covered. Thus the index is a fixed-weight index, but rarely a true Laspeyres index, since the weight-reference period of a year and the price-reference period, usually a more recent single month, do not coincide.

Ideally, the weights would relate to the composition of expenditure during the time between the price-reference month and the current month. There is a large technical economics literature on index formulas which would approximate this and which can be shown to approximate what economic theorists call a true cost-of-living index. Such an index would show how consumer expenditure would have to move to compensate for price changes so as to allow consumers to maintain a constant standard of living. Approximations can only be computed retrospectively, whereas the index has to appear monthly and, preferably, quite soon. Nevertheless, in some countries, notably in the United States and Sweden, the philosophy of the index is that it is inspired by and approximates the notion of a true cost of living (constant utility) index, whereas in most of Europe it is regarded more pragmatically.

The coverage of the index may be limited. Consumers' expenditure abroad is usually excluded; visitors' expenditure within the country may be excluded in principle if not in practice; the rural population may or may not be included; certain groups such as the very rich or the very poor may be excluded. Saving and investment are always excluded, though the prices paid for financial services provided by financial intermediaries may be included along with insurance.

The index reference period, usually called the base year, often differs both from the weight-reference period and the price-reference period. This is just a matter of rescaling the whole time-series to make the value for the index reference-period equal to 100. Annually revised weights are a desirable but expensive feature of an index, for the older the weights the greater is the divergence between the current expenditure pattern and that of the weight reference-period.

Cost-of-living index

A cost-of-living index is a theoretical price index that measures relative cost of living over time or regions. It is an index that measures differences in the price of goods and services, and allows for substitutions with other items as prices vary.There are many different methodologies that have been developed to approximate cost-of-living indexes. A Konüs index is a type of cost-of-living index that uses an expenditure function such as one used in assessing expected compensating variation. The expected indirect utility is equated in both periods.

Cost of Living (Rick Wakeman album)

Cost of Living is a progressive rock album released in 1983 by British keyboard player Rick Wakeman. Actor Robert Powell provided narration on the last track of the album.The track on the album called "Gone But Not Forgotten" was played at a memorial service for Countdown host Richard Whiteley shortly after his death. The voice at the very start of "Bedtime Stories" is that of Rick Wakeman's son (Benjamin). He was just 3 years old at the time of the recording.

Cost of Living (play)

Cost of Living is a 2016 play by playwright Martyna Majok. It premiered in Williamstown, Massachusetts at the Williamstown Theatre Festival on June 29, 2016, and had an Off-Broadway engagement in 2017. The play won the 2018 Pulitzer Prize for Drama as well as two Lucille Lortel Awards, including Outstanding Play.

Groovy Times

"Groovy Times" is a song by the Clash, featured on their The Cost of Living EP, and released as a promotional single in 1979 in Australia by Epic Records (AE7 1178). It was originally recorded as "Groovy Times Are Here Again" during the recording sessions for Give 'Em Enough Rope, however this demo has never been officially released, but can be found on many Clash bootlegs. It was never performed live.

The song's lyrics are filled with images of urban decay and civil unrest and focus on recurring Clash themes of alienation, monotony and oppression. According to their author, Joe Strummer, the lyrics were sparked by his disgust at the erection of fences in Britain's football terraces, built to keep fans apart in response to football hooliganism. Ten years later the Hillsborough Disaster would prove these fences fatal and his concerns irrefutably correct. The 'King of Early Evening ITV' mentioned in the song is confirmed as Bill Grundy, whose career was ruined after his infamous interview with the Sex Pistols and was indeed presenting early evening television on British terrestrial channel ITV. "I can remember his first appearance now look what's happened to him, so they put him in a dog suit like from 1964" is about singer-songwriter Elvis Costello.

The music, acoustic and guitar based, was predominantly written by Mick Jones and feature harmonica parts by him but credited to 'Bob Jones', a pseudonym that was apparently a reference to singer/songwriter Bob Dylan.

"Groovy Times" has subsequently been re-released on the Clash on Broadway and Singles Box box sets, its single-disc equivalent The Singles and the Super Black Market Clash and The Essential Clash compilations.


In economics, inflation is a sustained increase in the general price level of goods and services in an economy over a period of time.

When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy. The opposite of inflation is deflation, a sustained decrease in the general price level of goods and services. The common measure of inflation is the inflation rate, the annualized percentage change in a general price index, usually the consumer price index, over time.Economists generally believe that very high rates of inflation and hyperinflation are caused by an excessive growth of the money supply. Views on which factors determine low to moderate rates of inflation are more varied. Low or moderate inflation may be attributed to fluctuations in real demand for goods and services, or changes in available supplies such as during scarcities. However, the consensus view is that a long sustained period of inflation is caused by money supply growing faster than the rate of economic growth.Inflation affects economies in various positive and negative ways. The negative effects of inflation include an increase in the opportunity cost of holding money, uncertainty over future inflation which may discourage investment and savings, and if inflation were rapid enough, shortages of goods as consumers begin hoarding out of concern that prices will increase in the future. Positive effects include reducing unemployment due to nominal wage rigidity, allowing the central bank more leeway in carrying out monetary policy, encouraging loans and investment instead of money hoarding, and avoiding the inefficiencies associated with deflation.

Today, most economists favor a low and steady rate of inflation. Low (as opposed to zero or negative) inflation reduces the severity of economic recessions by enabling the labor market to adjust more quickly in a downturn, and reduces the risk that a liquidity trap prevents monetary policy from stabilizing the economy. The task of keeping the rate of inflation low and stable is usually given to monetary authorities. Generally, these monetary authorities are the central banks that control monetary policy through the setting of interest rates, through open market operations, and through the setting of banking reserve requirements.

List of countries by GDP (nominal)

Gross domestic product (GDP) is the market value of all final goods and services from a nation in a given year. Countries are sorted by nominal GDP estimates from financial and statistical institutions, which are calculated at market or government official exchange rates. Nominal GDP does not take into account differences in the cost of living in different countries, and the results can vary greatly from one year to another based on fluctuations in the exchange rates of the country's currency. Such fluctuations may change a country's ranking from one year to the next, even though they often make little or no difference in the standard of living of its population.Comparisons of national wealth are also frequently made on the basis of purchasing power parity (PPP), to adjust for differences in the cost of living in different countries. PPP largely removes the exchange rate problem, but has its own drawbacks; it does not reflect the value of economic output in international trade, does not take into account the differences of quality of goods and services among countries, and it also requires more estimation than nominal GDP. On the whole, PPP per capita figures are less spread than nominal GDP per capita figures.The United States is the world's largest economy with a GDP of approximately $20.513 trillion, notably due to high average incomes, a large population, capital investment, moderate unemployment, high consumer spending, a relatively young population, and technological innovation. Tuvalu is the world's smallest national economy, with a GDP of about $32 million, because of its very small population, a lack of natural resources, reliance on foreign aid, negligible capital investment, demographic problems, and low average incomes.Although the rankings of national economies have changed considerably over time, the United States has maintained its top position since the Gilded Age, a time period in which its economy saw rapid expansion, surpassing the British Empire and Qing dynasty in aggregate output. Since China's transition to a market-based economy through privatisation and deregulation, the country has seen its ranking increase from ninth in 1978 to second to only the United States in 2016 as economic growth accelerated and its share of global nominal GDP surged from 2% in 1980 to 15% in 2016. India has also experienced a similar economic boom since the implementation of economic liberalisation in the early 1990s. When supranational entities are included, the European Union is the second largest economy in the world. It was the largest from 2004, when ten countries joined the union, to 2014, after which it was surpassed by the United States.The first list includes estimates compiled by the International Monetary Fund's World Economic Outlook, the second list shows the World Bank's data, and the third list includes data compiled by the United Nations Statistics Division. The IMF definitive data for the past year and estimates for the current year are published twice a year in April and October. Non-sovereign entities (the world, continents, and some dependent territories) and states with limited international recognition (such as Kosovo, the State of Palestine and Taiwan) are included in the list in cases in which they appear in the sources. These economies are not ranked in the charts here, but are listed in sequence by GDP for comparison. In addition, non-sovereign entities are marked in italics.

List of countries by GDP (nominal) per capita

This page lists the countries of the world sorted by their gross domestic product per capita at nominal values. This is the value of all final goods and services produced within a nation in a given year, converted at market exchange rates to current U.S. dollars, divided by the average population for the same year.

The figures presented here do not take into account differences in the cost of living in different countries, and the results vary greatly from one year to another based on fluctuations in the exchange rates of the country's currency. Such fluctuations change a country's ranking from one year to the next, even though they often make little or no difference to the standard of living of its population.

Therefore, these figures should be used with caution. GDP per capita is often considered an indicator of a country's standard of living; although this is problematic because GDP per capita is not a measure of personal income.

Comparisons of national income are also frequently made on the basis of purchasing power parity (PPP), to adjust for differences in the cost of living in different countries. (See List of countries by GDP (PPP) per capita.) PPP largely removes the exchange rate problem but not others; it does not reflect the value of economic output in international trade, and it also requires more estimation than GDP per capita. On the whole, PPP per capita figures are more narrowly spread than nominal GDP per capita figures.

Non-sovereign entities (the world, continents, and some dependent territories) and states with limited international recognition (such as Kosovo, Palestine and Taiwan) are included in the list in cases in which they appear in the sources. These economies are not ranked in the charts here, but are listed in sequence by GDP for comparison. In addition, non-sovereign entities are marked in italics.

Note that the Irish GDP data below is subject to material distortion by the tax planning activities of foreign multinationals in Ireland. 2015 Irish GDP is over 150% of 2015 Irish GNI. To address this, in 2017 the Central Bank of Ireland created "modified GNI" (or GNI*) as a more appropriate statistic, and the OECD and IMF have adopted it for Ireland. 2015 Irish GDP is 143% of 2015 Irish GNI*.

All data are in current United States dollars. Historical data can be found here.

List of most expensive cities for expatriate employees

These are lists of the world's most expensive cities for expatriate employees (not residents), according to the Mercer, ECA International and cost-of-living surveys. Other surveys from online collaborative indices, such as Numbeo, Expatistan, or Eardex are not covered by this article.

Various factors enter into a city's cost-of-living for expatriate employees, such as monetary value, consumer confidence, investment, interest rates, exchange rates of the country's currency, and housing costs. This list does not account for cost-of-living savings accrued to local citizens through government-subsidized housing, health care, and education, differences in taxation, and many other factors irrelevant to expatriates. Cost of living may be much higher for expatriates than for local residents in a developing country, especially if expatriates expect a standard of living similar to a developed country.

Purchasing power parity

Purchasing Power Parity (PPP) is a theory that measures prices at different locations using a common good or goods to contrast the real purchasing power between different currencies. In that case, PPP produces an exchange rate that equals the price of the basket of goods at one location over the price of the basket of goods at a different location. The PPP exchange rate may be different than the market exchange rate because of transportation costs, tariffs, and other frictions. PPP exchange rates are widely used when comparing GDP from different countries.

Salaries of members of the United States Congress

This chart shows historical information on the salaries that members of the United States Congress have been paid. The Government Ethics Reform Act of 1989 provides for an automatic increase in salary each year as a cost of living adjustment that reflects the employment cost index. Since 2010 Congress has annually voted not to accept the increase, keeping it at the same nominal amount since 2009. The Twenty-seventh Amendment to the United States Constitution, ratified in 1992, prohibits any law affecting compensation from taking effect until after the next election.

Additional pay schedule for the Senate and House positions:


The Cost of Living (EP)

The Cost of Living is an EP by the English punk rock band the Clash. It was released on 11 May 1979 in a gatefold sleeve. The EP was produced by the band and Bill Price, it marked a transition in musical styles for the band, bridging the intensity of their earlier, punky albums with the broader, more American influenced rock and roll yet to come on London Calling, most evident on the folk rocking "Groovy Times" and "Gates of the West".

The Clash's cover of Sonny Curtis' "I Fought the Law" became one of the definitive recordings of the song, and remained in the band's live set list for much of the rest of their career. Joe Strummer also performed it with his later bands, including during his stint with The Pogues. The early single "Capital Radio" was re-recorded because the band learned that copies of the original Capital Radio EP were selling for high prices. "Capital Radio", later listed as "Capital Radio Two", is much longer, mainly because of a protracted outro.

"Gates of the West" clearly describes the ecstasy of the Clash in their first encounter with the United States: "Eastside Jimmy & Southside Sue both said they needed something new". "From Camden Town Station to 44th & 8th" describes their journey from their London neighborhood to the middle of Manhattan.

It was recorded at Wessex Studios in London's Highbury district, and features "extra high vocal" credited to Dennis Ferranti and harmonica credited to "Bob Jones" (a pseudonym of Mick Jones).

The Cost of Living (Lost)

"The Cost of Living" is the 5th episode of the third season of Lost, and the 54th episode overall. It aired on November 1, 2006, in the US, averaging 16.07 million viewers, and on December 5, 2006, in the UK, being watched by 1.15 million viewers. The episode was written by Monica Owusu-Breen and Alison Schapker and directed by Jack Bender. The plot centers on the character of Mr. Eko (Adewale Akinnuoye-Agbaje), who in flashbacks shows how he became a priest replacing his dead brother Yemi (Adetokumboh M'Cormack), and in the present day events is haunted by visions of Yemi while other castaways decide to visit a Dharma Initiative station.

The episode was written to finish Eko's character arc as Akinnuoye-Agbaje had requested to leave the show while finishing the second season. Reviewers subsequently praised "The Cost of Living" while considering that the departure of Eko made Lost lose one of its best characters.


This page is based on a Wikipedia article written by authors (here).
Text is available under the CC BY-SA 3.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.