Granted, PPP adjusted GDP is much more meaningful than "raw" GDP.
However the choice of basket should not be the same among different
countries (as correctly pointed out in the Economist's survey). A car
in US is an absolute neccessite. But it may not be true in other
countries, especially those developing countries / metrolitan cities
with good public transportation.

Also, the units/weight of each item in these basket should not be the
same as well. For example, gasoline price in US is much cheaper than
that in UK. However, I spent much more on gasoline in US than that in
UK, simply because I drive much more in US. So, if simply put 1 unit
of gasoline in the basket, you may get a false impression.


======================================= MODERATOR'S COMMENT:
Posters to this thread should relate comments to financial planning.

A useful measure of how expensive a country is to divide its GDP at
market prices by its GDP in purchasing power parity (PPP) terms. GDP at
market prices is how you measure national income at the prices of the
country, while GDP in PPP terms takes into account how much it costs
the same representative basket of goods in each country.

In 2005, the US had a GDP at market prices of $12.49 trillion, while
GDP in PPP terms was $12.31 trillion. That is, the index for the U.S is
101.5% (see https://www.cia.gov/cia/publications...k/geos/us.html)

The UK, for instance, had a GDP at market prices of $2.228 trillion,
and a GDP in PPP terms of $1.818 trillion. The index for the U.K is
122.6%, which means that the same basket of goods costs about 20
percent more in the UK than in Britain (see
https://www.cia.gov/cia/publications...k/geos/uk.html).

Japan: GDP at market prices of $4.664 trillion, and a GDP in PPP terms
of $4.025 trillion, i.e, index of 115.8 percent, which means that Japan
is about 14 percent more expensive than the U.S.

Germany: GDP at market prices of $2.73 trillion, and a GDP in PPP
terms of $2.48 trillion, which means that Germany is about 9 percent
more expensive than the U.S.

Finally, my own country (Spain): GDP at market prices of $1.019
trillion, and a GDP in PPP terms of $1.033 trillion, this implies an
index of 98.6 percent which means that Spain is about 3 percent cheaper
than the U.S.

Of course, these were 2005 data. In 2006, given the depreciation of the
U.S. dollar against most major currencies (about 10 percent vs. the
Euro, for instance), the U.S should be now cheaper than a year ago.

- quote -

Thanks, it's is useful. Personally I think those statiscs is useful,
but at the same time, may be misleading. (For example, I read an
analysis few weeks ago that the most profitable single store of many
luxury cloths chains are in China, not in New York or London. --- this
will be unimaginable if you believe the purchasing power using the
average GDP etc).

- quote -

offers the highest living quality. No other people in the world has
such strong believe in their own countries (probably except North
Korean ;-> ) ---- This is people's perception.

Now in reality, I think besides the physcological factors, you need to
think about the purchasing power and the availability of consumptions
good. The purchasing power is decided by your net income and cost of
living. The availability of goods is also important is because
otherwise not matter how rich you are, you cannot get anything.

This is where I feel puzzled. average US person does not have the
highest purchasing power in the world, and many other countries offer
the same level of goods availability as US does. So why people always
think US offers highest living standard? Or it's just a faked /
blinded belief?

- quote -

I think it's true as long as you compare US with developing countries.
But it may not be a black-and-white if you compare US with other
developed countries, especially those "welfare nations".

- quote -

~45K is the same figure I know. But paid a median salary by definition
should not be classified as poor.

- quote -

I believe your friend's experience. One thing I think most western
people does not realize about those emerging countries is that you
should not treat them as a whole. Just like BBC commentary put it "If
you are talking about China, you need to think there are two Chinas".
(i.e. a wealth costal China and a poor inland China). I have not been
to India, but I can say most western people who have been to the
coastal Chinese cities, like Shanghai, will be amazed. I personally
have many US/Euro friends who just want to live there, quoting the
quality of live as the reason. Of course, I will be unable to imagine
that they will love to live in inland China for the reason of life
quality.


======================================= MODERATOR'S COMMENT:
Posters to this thread should relate comments to financial planning.

My interest wrote:

- quote -

This might help.
http://www.economist.com/media/pdf/QUALITY_OF_LIFE.pdf

Anoop

- quote -

Taking that question at face value, I think the discussion could go two
directions. The direction I choose is "quality of life". regardless
of the cost, I think the quality of life of a "poor" American is better
than that of a "poor" citizen in other places.

Of course then poor needs to be defined (I define as making less than
the median income of the country- ~45k in US, correct?)

quality of life in US is clearly better than many alternatives. I had
a co worker just spend 6 weeks on assignment in India. He came back
with "horror" stories of cab rides where people were sticking arms/legs
in cab to prevent cab from moving until he paid this vagrant some
money... his escort was responsible for kicking/ fighting these people
to allow my coworker to do what he was paid to do...

I heard comments to effect of the roads were crowded with cars, bikes
and pedestrians. No stop lights. In middle of intersection was a
person riding an elephant (probably why American cars are not imported
there?- LOL- the elephant is probably more reliable).

Whether it's cheaper to live in India is one issue, but it was clear
from talking with him that our QUALITY of life is much better.

There will be obvious exceptions to this anecdote or other issues
brought up regardless of quality. Bill Gates quality of life would be
high (because of his wealth) regardless of where he lives if the
civilians are civilized.

It may not be a strick financial planning topic, but as I saw many
active members having international background, so I'd like to hear
your views on this.

The question is is US living standard is definitely higher than that in
other countries? Or alternatively, is the cost of living is really
cheaper here?

- quote -


First, granted, as a bigger country, US should be able to offer its
resident lower living cost than land-constraint countries such as UK,
Japan, Switzerland etc. However I found American's income is not
neccessarily higher than others, but the living cost is not that
cheaper as most people think. For example, for many professions, UK,
HK etc pay not less than US. From the living costs perspective, only
imported items (e.g. clothes, electronic gadgets etc) are cheaper, many
other things (e.g. utility, banking etc) are not cheap at all....
oddly, the bread/milk are sold more expensive in US than in London!

I also find people are not comparing apple-to-apple. A typical
American will spend more than his make (of course, many memebers of
this group are much more conservative), while in the rest of world,
people spend less than he makes. So if an American who makes $100K, he
may have a much more comfortable life than somebody living elsewhere
(or even in his neighbourhood) who is paid the same, but may spend
less.

Does this make sense to everybody?