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Regional price parities

How the cost of living differs across states


A well-known fact in the ordinary business of life is that the value of money doesn’t stay the same: The amount of goods and services you can buy with $100 today is far less than what you could buy 30 years ago. A somewhat similar comparison can be made about the purchasing power of $100 in different places. The amount of goods and services you can buy in a developed country, such as the United States, is far less than what you can buy in a developing country, such as India. Here, we analyze this latter phenomenon but within the United States.

Regional price parities (RPPs) measure the differences in the price levels of goods and services across states and metropolitan areas for a given year. RPPs are expressed as a percentage of the overall national price level for each year, so RPPs higher than 100 represent state prices higher than the national average and vice versa. The map shows the price parities in 2015 for each U.S. state. In general, price levels are lower in the middle section of the country and get higher on the east and west coasts.

In 2015, Hawaii’s RPP (118.8) was higher than that of any state. The other locations with the highest RPPs were District of Columbia (117.0), New York (115.3), California (113.4), and New Jersey (113.4). Kentucky (88.6), South Dakota (88.2), Arkansas (87.4), Alabama (86.8), and Mississippi (86.2) had the lowest RPPs among the states. States with RPPs closest to the national average price level were Vermont (101.6), Delaware (100.4), Illinois (99.7), Florida (99.5), and Oregon (99.2).

RPPs are important because they help inform the purchasing power behind a person’s income in different areas of the country. For example, an income of $47,520 in Hawaii has the equivalent purchasing power of an income of $36,480 in Mississippi because both of these incomes divided by the state’s RPP equal $40,000.

How this map was created: In GeoFRED, click the green “Build New Map” button in the top right corner of the page. Next, click the gray tools menu in the top left corner of the map. Set the region type to “State” and search for “Regional Price Parities” on the data dropdown menu. Select the series “Regional Price Parities: All Items.” Make sure the frequency is set to annual, units are index values, and the date is 2014.

Suggested by Maximiliano Dvorkin and Hannah Shell.

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