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Should this question be considered off-topic? I have my own opinion which I'll post as an answer.

Is there a measure that uses both cost of living plus income?

I don't know much about economy and financial measures, but was looking at a website that compares cost of living in different countries, 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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I think this is on-topic, but I don't want to override three other established users of the site by immediately voting to re-open (which would take immediate effect as I'm a moderator). [Update - it received 4 other reopen votes so I've cast one too and it's now reopened]

Our "off-topic" list says:

Questions about economics that are academic or have no bearing on personal finance

Personally I think this question falls within the exception as while it's asking about economics, it's an area that's clearly directly relevant to personal financial decisions (should I move to country X?). The OP later commented that he is actually considering moving so the question isn't clearly relevant, but even without that information I think the question feels like quite a practical one.

  • There are some that are a gray area. I viewed it as an economic question, but I'm glad to see the interest, and participation that resulted in a re-open. – JoeTaxpayer Sep 1 '16 at 13:37
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    I agree that it is a relevant personal finance question. Even within a country you see ranges of cost of living. It is hard to make this sort of decision. Especially moving from a high cost of living area to a lower one, because you may be taking a pay cut. But if the difference in cost of living is great enough, your purchasing power increases. Which can increase your disposable income and your quality of life. Definitely overlaps significantly with Personal Finance. – Xalorous Sep 2 '16 at 22:11
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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.

This question although closed as economics, can equally be closed as Broad or Opinion based.

It's not just salaries, there are sites that provide a good guidance for what the average salary for an profession with x years of experience would be. This doesn't solve the issue.

Purchasing Power Parity is also know in quite a few currency pairs.

There are various aspects of lifestyle that are different. Hence comparison for like to like becomes difficult ... hence broad, and what to adjust to becomes opinion ...

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.

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.

Plus there is traffic, cleanliness, climate, culture, etc ...

All these aspects are very different.

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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    I think your answer above would be a good answer to the original question: "Yes, there exists a measure [...] but here's why it is a poor measure: [...]" – Chris W. Rea Sep 1 '16 at 12:47
  • @ChrisW.Rea ... I could if the question gets reopened. However I would be more inclined if the Question was phrased more like "What factors should one consider" when making such a decision. I can't seem to find, but there were couple of such questions. Earn in US retire in 3rd world country. – Dheer Sep 1 '16 at 16:12
  • It's been reopened. :) – Chris W. Rea Sep 1 '16 at 19:58
  • Your point is valid, and applies significantly in comparing disparate countries and cultures. However, your example is a perfect one to demonstrate why it is important to investigate cost of living and standard of living in a destination when deciding whether to move there. The answer is, if you want to stay in a 4 bedroom, 2 bath, separate house in India it costs significantly more, affecting the apparent difference in cost of living. – Xalorous Sep 2 '16 at 22:16
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My problem with this question is that since exchange rates and inflation and public services and such are continuously changing, specific advice would become obsolete quickly.

A question about how to perform this kind of analysis and known hazards/assumptions would have better longevity.

  • Doesn't the question fulfil those criteria? It's asking about a general measure, not the current situation. – Ganesh Sittampalam Sep 3 '16 at 9:06

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