You've overlooked the case where I want to live like a Jakartan in San Francisco, eating rice for breakfast, lunch, and dinner, and renting 50 square meters of

You've overlooked the case where I want to live like a Jakartan in San Francisco, eating rice for breakfast, lunch, and dinner, and renting 50 square meters of living space. Take the minimum, over all cultures, of what would be taken as a comfortable lifestyle, and then assess the income required to maintain that lifestyle in various cities to see that, in a real sense, those cities do have different costs of living. That said, I believe the most sensible companies will not allow their HR/payroll departments to apply a standard cost-of-living formula, simply because there are bound to be prospective employees in Jakarta whose market values are higher than those of other prospective employees who happen to live in SFO and, as an employer, I'll want to hire all those people at their respective market values.