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> If PPP is 21.3 (2019 data) between USA and India, a Harley Davidson in India should be 21.3 times cheaper than a Harley Davidson in USA. It isn't. The cost is

> If PPP is 21.3 (2019 data) between USA and India, a Harley Davidson in India should be 21.3 times cheaper than a Harley Davidson in USA. It isn't. The cost is pretty much the same. So is the case with iPhones. Even if iPhones are manufactured in India it would still cost slightly less than in USA. It will never be 21.3 times cheaper. PPP does not mean that Harley Davidson in India would be 21.3 times cheaper. It means that the value of Harley Davidson in India in US$ would be equivalent in the US when the price is 21.3x If you do not like PPP, you can use another metric to normalise prices. But, you can not simply compare two goods in two different currencies by taking an exchange rate. You need a normalisation factor. Every metric has its shortcoming - pick one but don't compare absolutes.

shripadk 6y ago
> It means that the value of Harley Davidson in India in US$ would be equivalent in the US when the price is 21.3x You lost me here. Can you elaborate on this more please? When it came to data comparisons you literally did multiply 21.3 with 9 cents and arrived at the value of 1.91$ per GB. So how is your comparing data costs using PPP as a normalizing factor fine but not fine when it comes to me comparing cost of manufacturing an iPhone or a Harley Davidson in both countries? Your argument isn't consistent. How can you ignore exchange rate and only look at PPP and decide the cost of living? It just doesn't make sense to me. Sure PPP gives a rough idea about where countries stand relative to the US when it comes to purchasing power parity but, more often than not, it is too far off from ground reality.
- tchalla 6y ago
  Let me once again repeat what I have said and please take some time to listen and understand it * You can not compare goods across two countries by simply taking the exchange rate, you need to normalise to account for different factors like disposable income * I took PPP as the normalisation metric. It is not perfect but is meant for this purpose. * If you are not happy with PPP as a normalisation metric, you can choose another one as defined by economists. If you want to come up with your own, you are also free to take another metric and agree with economists to use them. The metrics you have suggested are already considered in the PPP calculations. Look into them Key Point : You can NOT compare good(s) across two different countries/currencies in absolute values.
  - shripadk 6y ago
    > * You can not compare goods across two countries by simply taking the exchange rate, you need to normalise to account for different factors like disposable income This is where you are wrong. You have to take exchange rate when calculating PPP. Which is what I have been trying to explain to you. You are completely skipping exchange rate, which is why you are getting an inflated figure of 1.91$ per GB. You should be calculating it this way: Exchange rate: 73.17 INR = 1 USD Now 9 cents is, 0.09 USD = 0.09 * 73.17 = 6.58 INR. Since PPP is 21.3, 6.58 INR would be 6.58 / 21.3 = 0.3 USD So 9 cents in India is equal to 30 cents in USA. Now, that is 30 cents per GB and not 1.91$ per GB. Remember that PPP is INR/USD and not USD/USD.
    - tchalla 6y ago
      > So 9 cents in India is equal to 30 cents in USA. Now, that is 30 cents per GB and not 1.91$ per GB. I couldn't get this from your earlier comments. I get it now.

shripadk 6y ago

> It means that the value of Harley Davidson in India in US$ would be equivalent in the US when the price is 21.3x You lost me here. Can you elaborate on this more please? When it came to data comparisons you literally did multiply 21.3 with 9 cents and arrived at the value of 1.91$ per GB. So how is your comparing data costs using PPP as a normalizing factor fine but not fine when it comes to me comparing cost of manufacturing an iPhone or a Harley Davidson in both countries? Your argument isn't consistent. How can you ignore exchange rate and only look at PPP and decide the cost of living? It just doesn't make sense to me. Sure PPP gives a rough idea about where countries stand relative to the US when it comes to purchasing power parity but, more often than not, it is too far off from ground reality.

tchalla 6y ago
Let me once again repeat what I have said and please take some time to listen and understand it * You can not compare goods across two countries by simply taking the exchange rate, you need to normalise to account for different factors like disposable income * I took PPP as the normalisation metric. It is not perfect but is meant for this purpose. * If you are not happy with PPP as a normalisation metric, you can choose another one as defined by economists. If you want to come up with your own, you are also free to take another metric and agree with economists to use them. The metrics you have suggested are already considered in the PPP calculations. Look into them Key Point : You can NOT compare good(s) across two different countries/currencies in absolute values.
- shripadk 6y ago
  > * You can not compare goods across two countries by simply taking the exchange rate, you need to normalise to account for different factors like disposable income This is where you are wrong. You have to take exchange rate when calculating PPP. Which is what I have been trying to explain to you. You are completely skipping exchange rate, which is why you are getting an inflated figure of 1.91$ per GB. You should be calculating it this way: Exchange rate: 73.17 INR = 1 USD Now 9 cents is, 0.09 USD = 0.09 * 73.17 = 6.58 INR. Since PPP is 21.3, 6.58 INR would be 6.58 / 21.3 = 0.3 USD So 9 cents in India is equal to 30 cents in USA. Now, that is 30 cents per GB and not 1.91$ per GB. Remember that PPP is INR/USD and not USD/USD.
  - tchalla 6y ago
    > So 9 cents in India is equal to 30 cents in USA. Now, that is 30 cents per GB and not 1.91$ per GB. I couldn't get this from your earlier comments. I get it now.