What Is Cost of Living Index?
A cost of living index measures the relative expense of living in a specific area compared to a baseline (usually the national average = 100). It accounts for differences in housing, food, transportation, healthcare, and other essential expenses across geographic areas.
Multiple organizations publish cost-of-living indices with different methodologies:
BLS Regional Price Parities (RPP): The official federal measure, published by the Bureau of Economic Analysis using BLS price data. Covers all goods, services, and rents. Available for states and metropolitan areas. This is what AffordMap uses because it's the most methodologically rigorous and freely available.
C2ER COLI: Published quarterly by the Council for Community and Economic Research. Based on price surveys from participating areas covering 57 consumer goods and services. More granular than RPPs but requires a paid subscription and doesn't cover all metro areas.
Numbero/Expatistan: Crowdsourced price comparison platforms that cover international cities. Less methodologically rigorous but more current and broader in geographic scope.
The key insight about cost-of-living indices: housing is typically the largest component (30-40% of the weight), which means the index is heavily influenced by rent and home prices. Two cities with identical grocery, gas, and healthcare costs but different rent levels will show meaningfully different COL indices.
Example
San Francisco’s cost of living index (RPP) is 115.6. New York City’s is 98.2. Houston’s is 98.6. This means a basket of goods and services that costs $1,000 at the national average costs $1156 in SF, $982 in NYC, and $986 in Houston. Source: BEA RPP.
Data source
Bureau of Economic Analysis, Bureau of Labor Statistics. View source data (opens in new tab)
Related terms
See cost of living index applied to real salary data
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