Factors to Be Considered in Measuring Intercity and Interregional Differences in Living Costs

Abstract

M EASUREMENTS of intercity differences in living costs may serve four distinct purposes: They certainly are a fruitful and interesting source of academic discussion; they serve to guide persons contemplating a change of domicile and wishing to calculate the purchasing power of income in two different cities; they may be an important factor in wage determination, not only for the government administration enforcing a minimum wage law, but for associations of employers and employees negotiating wages over any area in which living costs appear to differ, and desiring to determine wages which will provide equivalent well-being in the different cities of the area; and they may become a factor in adjusting grants within governmental units, as state grants to counties, or Federal grants to states. It is perhaps hardly necessary to say that this discussion is not concerned with differences in standards of living among cities, or differences in planes of living. Differences in standards of living, that is, differences in the manner of living considered normal and proper by the families in any two communities, are a function of differences in custom, education, and in income, while differences in the plane of living actually found in certain communities may result either from differences in income, or in standard of living, or both. We might define our task as that of measuring the income necessary to provide equivalent satisfactions, if satisfactions were not influenced by and made up of so many psychological factors not readily susceptible of measurement; if one could disentangle actual preference from compromise with circumstance. Since that is impossible, we are forced to seek budgets of goods and services which will provide equivalent real incomes under different conditions. Even though we are forced, by the elementary state of the science of psychology, to use this sort of measure, we should be less than scientific if we did not admit that given goods and services provide different degrees of satisfaction in different circumstances. There are many communities in the United States where the young men go to the movies on Saturday night in corduroy trousers and coarse blue cotton shirts with girls wearing the simplest of cotton prints, and it is impossible to measure the difference between their enjoyment of their clothes and the movie, and that of persons in other communities where tailored suits, broadcloth shirts, and rayon prints are the custom. When such differences in consumption habits