The Mercer "cost of living index" shows the fifty most expensive cities in the world. US urban areas turn out to be pretty cheap — New York is number 15, Los Angeles is number 42, and there are no other American cities on the list. On the other hand, both NYC and LA got substantially cheaper over the previous twelve months, which I believe is an exchange rate phenomenon. Either way, a great nation such as ours ought to contain more super-expensive cities than does Japan, not fewer.
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Most Expensive Cities
01 Nov 2007 08:39 am
Comments (26)
If Manhattan was a city by itself it would be considerably higher than 15. The thing about NYC is that it is patchy with poorer areas. Also a lot of super rich New Yorkers live in exclusive NJ/CT suburbs. I am guessing Japan has a much more even distribution of wealth as compared to the US. That is the real problem. Too much wealth in the hands of too few.
It's very hard to know what to make of this list without a pretty detailed understanding of how it's compiled. The fact that it's aimed at expats to be used for corporations to gauge COL definitely gives reason to be skeptical about using it for other purposes (general conclusions about COL for the average person).
In a place like NYC, COL for expat corporate types is probably pretty close to COL for locals. In Abidjan (#35) or Douala (#24), not so much, as the COL reflects the cost of importing western-style tastes into the country. Some of this is improved quality of life (like reliable heat), but some is just cultural (like wanting American cereal rather than a local breakfast food).
Also, why would it be true that a great nation should have a lot of super-expensive cities? It seems like COL for a city might be highest when the country has only one major city -- high demand, low supply -- and lower when the country has lots of major cities (NY, LA, Chicago, Atlanta, . . .). Isn't the latter a good thing?
Can I point out that this lists methodology is so flawed it makes it worthless. It measures things based on the American standard of living. I have lived in Seoul, it is not that expensive. IT is expensive if you decide you need a standard american size apartment and that you will do all of your shopping at department stores. In Korea, even the very wealthy do not do that. You also probably do not need to commute by car everywhere.
As JWR notes above these lists are not stright-forward accounts of the expenses of living in these cities _for natives_ but rather for visiting business men, some other expats, and others putting together cost of living adjustments, per diems, and expense accounts. Therefore, they use things like the inflated rates that foreigners often pay for things like cab rides and rent in many countries even though no non-stupid local would pay such rates, and things like going to "western" or "American" clubs, shopping at an "american standard" shopping center and buying the sorts of goods that an american is used to even if these are not common locally and so the stores and items in question are much, much more expensive than the varient found in the US or what anyone in the local market would buy. So, for example, peanut butter and brown sugar are not common items in Moscow. You can buy them at a few of the most expensive stores that market themselves only to the richest Russians trying to show off and to American businessmen on expense accounts or making huge salaries. These items cost 2-3 (or more) times what they cost in the US. So, this goes in to making the cities look even more expensive than they are (and moscow is expensive!) despite the fact that this is mostly an artifact of trying live exactly like a rich American in a non-American city.
I'm going to have to similarly call shenanigans on this list. Beijing is #20. Beijing?!?! Beijing where one can go to a decent sit down restaurant and have a meal for under 3 dollars? That is more expensive than every American city but New York? I do not know what exactly this pretends to be measuring, but it the conclusions are a bit puzzling, to say the least.
If they're not normalizing the cost-of-living in the cities to control for currency fluctuations, the study is essentially worthless as a commentary on those cities (though potentially useful for consultants and corporate travelers). After all, the denizens of a given city almost certainly earn in the local currency, and how much life they can afford is basically unchanged by currency shifts.
Am I missing something or is Chicago not on that list? Around 1999 Chicago had a higher cost of living (at least, travel-to living) than New York, London, and Tokyo[1]. Exchange rates have no doubt changed that but there is no way that Glasgow is more expensive than Chicago on either a travel-to or live-in basis.
Cranky
[1] I was planning some meetings at the time and was shocked to run into this - I always think of Chicago as a cheap alternative to NYC.
This list is mostly useless.
As to Matt's point, the Japanese are crowded onto a relatively small area of land but with half our population. We've got more space than we can pave (though we're trying), so of course things will be cheaper here.
a great nation such as ours ought to contain more super-expensive cities than does Japan, not fewer.
Gosh, we can't allow ourselves to fall behind the Japanese--everybody raise prices!
I'll agree with the posters above that this survey quantifies the cost of maintaining an upper-middle income American style of living, using American brands in American packaging. In Tokyo this would mean doing one's grocery shopping at National Azabu (if you've lived in Tokyo you'll get the reference), eating out at western-style restaurants, and driving everywhere and paying Tokyo's incredibly expensive rates for parking.
When I lived in Tokyo my company paid a very generous COL allowance, and I quickly found I could underspend it easily. After about my first three weeks there, the only reason I went to National Azabu was to buy the ingredients for Christmas dinner (you just can't find a whole chicken or a turkey or stuffing in a Japanese supermarket). As an example of how expensive National Azabu shopping was, the ingredients for my mince pie (two jars of mincemeat and pie-crust sticks) cost about $20.
This comparison says nothing about the relative costs of Tokyo and New York for someone who has adjusted to life in either city, but I'm sure it serves the purpose for which it was intended.
There are American cities with higher costs of living, but we keep them a secret to keep all you peons out.
Kiev more expensive than Glasgow?! This list is a joke.
I think that what's pushing up a lot of Asian cities (or at least Seoul) in the rankings is that its very common for apartments to demand massive deposits instead of or in addition to rent.
For example next year I'm going to pay a $70,000ish deposit in order to get a decent rent-free apartment, which isn't a bad deal at all.
However, having to shell out a few thousand dollars for a decent rental unit in the business district or having to pay thousands and thousands for rent if you want the kind of housing that Americans are used to without those massive deposits has to be the main reason that Soeul is so high.
For example US army officer who're stationed in Seoul get provided with off base housing free of charge. I knew one whose apartment's (for them and their roommate) cost over $7,000 a month, which is absolutely insane.
Of course things are expensive in Japan. They have few natural resources and difficulty growing basic food staples on the land there (which is why Japanese food comes from the sea). This means that everything is imported, which raises the price of things substantially in general.
well, they got London right, expat or not, it's ridiculous, property is the main, though by all means not the only factor (but I read that house prices are supposed to be going down by up to 15% percent next year, bring it on, yeah!)
generally I think that comparing what, say, $2000 a month to rent or $500.000 to buy will get you in that city, will give you a good indication of living costs
on the other hand, I really don't think Berlin belongs in the top 50, as one can live comfortably on a shoestring budget there
I lived in Shanghai for the summer, and I lived pretty well, though not extravagantly, on very little. In a nice apartment in an excellent location, no less. This list is weird.
A close friend just returned from Sheffield, England. He'd gone to school in England, had visited several other times, and was anxious, he said, to try to move there. No more. After his 4 week stint, he couldn't wait to get back where hamburgers sizzle on an open grill night and day. Even with his expense account, he'd been staggered by the difference in how expensive things were. And this wasn't London. This was the industrial Midlands. And not Birmingham or Manchester, either.
This is not a cost-of-living comparison. It's a cost-of-sending-an-executive-to-live-there comparison. It is trying to answer the question: If you were used to living on Central Park West, what would it cost you to live in a similar neighborhood in other cities throughout the world? Sometimes, security is a big cost of living somewhere.
Yeah, Japan's expensiveness is less a matter of culture, or policy, or distribution, than the fact that it's really a bunch of young, steep mountains in the middle of an ocean.
I remember visiting a friend in Kansas City five years ago, and he had just bought a house for $100.000, and I thought wow, that's cheap. Obviously, it wasn't anything big or fancy, but it was in good condition, freestanding, in nice enough and safe area and had a garden. You won't find anything like that in all of western Europe. I think Americans should be happy about this.
I'll bet the comparison doesn't count the cost of sitting in your car two hours a day.
Benjamin Franklin pointed out back in 1751 that what we now think of as the American Dream -- that the average person can afford to marry, have children, and own a house and land -- was so much easier in America due to having much land and little labor, and thus cheap land prices and high wages. England, in contrast, was stuck in the Malthusian trap described in A Farewell to Alms of late and non-universal marriage with a median person not living any better than in 1200.
I have to join the general skepticism about the list. I suspect they just didn't really bother to look at some American cities. I notice the SF Bay area is not on the list, for instance, which would mean that, if they did consider this metro area, it doesn't make the top 50, whereas LA is #42. Is this possible? LA's a very expensive city by American standards -- at least when the cost of housing is considered. But the Bay Area is positively astronomical when it comes to housing -- or so I've been told.
I am not familiar with most of the overseas locations, having only been to Tokyo and Seoul, and over one-three years ago at that. But even domestically, I agree with what people above said that the list is bull. There is no way that LA is more expensive than Honolulu, either middle class to middle class or corp exec to to corp exec.
Comments closed November 15, 2007.
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Heads in the Sand
Why are Algiers and Abidjan so expensive?
And Bratislava is more expensive than every American city besides New York? How is that even possible?
Posted by John | November 1, 2007 8:51 AM