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On Thu, 3 Nov 2005, Mike Miller wrote:
It's not so easy. If food is 10% of your expenses, and food costs 20%
more in one place than another, then that difference in food prices
should have a 2% effect on cost of living, right? But food prices don't
really vary much from place to place in the US. Housing prices vary a
lot, and housing is a big chunk of most people's expenses. Also,
housing prices are probably positively correlated with food prices,
although weakly.
I should add that another major complication in this kind of analysis is
that in the most expensive cities, housing is so pricey that people often
commute from smaller surrounding communities that are not listed in the
Cost of Living Index. For example, Cambridge, MA, is really pricey, so
"no one" lives there, or so I was told when I interviewed for a job out
there some years ago.
Mike
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