why is cost of living so different between countries and even between cities of the same country?
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They’re more desirable places to live. People will pay more money for a nicer place to live. San Francisco feels air conditioned in the summer while being oceanside, and for many that’s hard to beat.
Cost of living is, like everything in a free market economy, a function of supply and demand. Quite simply, the demand for housing in Manhattan is VERY different from the demand for housing in Boise, Idaho. This also means the supply of housing is different in the two cities, plus the cost of constructing new housing, hiring workers to build the new housing, buying construction materials for the new housing, etc. It’s all related and interconnected, but is a function of supply and demand.
basic supply and demand. if you have 1 pizza cut into 8 slices and 100 hungry people who want pizza, the 8 who pay the most will get them.
The top three things that factor real estate prices are location, location and location. If people pay more to own/rent/whatever to live there then services may also be more expensive.
People are talking about supply and demand but laws and regulations are a part of it. Some cities have a lot higher taxes than other cities even with similar populations. You can see this in just gas prices like going from Pennsylvania to another state, you can sometimes have a reduction of 20-30 cents/gallon because of PA’s high gas tax.
Many areas have monopolies for their utilities so their prices are high due to that.
Some cities or certain parts of the cities have limited grocery stores so high prices for them or high theft so high costs to offset the theft.
This plays into supply and demand but the regulations that make it difficult to build new housing so you can’t create the housing to meet the demand.
Cost is set based on one thing: the prices people are willing to buy/sell for.
You can sell 1lb potato’s for $100 but if no one wants it, your potato is worthless. You’ll either have to lower your price, hope someone buys it, or enjoy it yourself.
It just so happens the community that you live in think that 1lb potato cost $2. Perhaps in another community nearby, the cost is $4. The cost of 1lb potato in the US can range between $0.50 to $5.00, just depends on the community you’re in.
Sadly, the community in a different country, such as Switzerland thinks the cost is more than $5; but in places like Thailand it cost $0.02.
So cost of living is inclusive of food, lodging, transportation, work wages, etc. and all those prices are dependent on what the community is willing to pay for.
Most people think it’s the government, and to an extent they do play a role. But the people who buy/sell stuff out number the govt, so the people actually control the prices. It just seems like they don’t. (And by people, I mean quantity of people, but also the person with the most money).
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