4 ms·

I’ve been mulling a theory that cost of living is generally the same wherever you go, it just changes from implicit to explicit costs and vice versa. As many ha

I’ve been mulling a theory that cost of living is generally the same wherever you go, it just changes from implicit to explicit costs and vice versa. As many have pointed out the “most affordable” on this list are high crime or bad weather so it actually has a far higher cost than your cash outlay. Nicer weather and low crime areas have a higher cash outlay because the implicit costs are lower.

dougSF70 5y ago
I agree. I think there is some analysis to be done looking at the cost of living versus different states tax regimes. For example, Oregon has no sales tax, are everyday items more expensive. Same for Florida, zero state income tax might cause price inflation. I am also reminded of this when ever I read an article that cherry-picks one dimension that shows place x is better than place y. I am suspicious, as you point out, that you pay in other ways.
- house9-2 5y ago
  > Oregon has no sales tax, are everyday items more expensive. Nope. At least I didn't notice that when I lived there (2012 - 2017). Income tax is higher than most states but still less than California.
mlac 5y ago
To some extent, but there are definitely regional differences. Living in Boston is just more expensive than living in Houston. Controlling for everything else, Boston just doesn’t have the land or labor available to build houses like Houston can. This makes it cheaper. Then factor in no state tax and generally reduced gov fees of Texas, and it’s a lot easier to have a higher quality of life (in the material sense) in Houston than in Boston. I do think this impacts a number of things, including diversity and reduced barriers to achieving success (Houston is the most diverse city in the country).
- z3ugma 5y ago
  I feel like in the long run this balances out and that's part of what's priced into the COL. Houstonians are in a boomtown getting a temporary advantage that could be offset in the long run, whether by industrial decline, climate change and severe weather, traffic, or some other factor. Boston does have a Superfund industrial past to reckon with and a lot of outlying MA cities like Worcester, Lowell, Fall River are definitely not balancing out on the implicit/explicit scale by comparison to Boston. What is the "core" of Houston that will retain its benefit when the tides turn?
  - mlac 5y ago
    Assuming by the tide you mean oil and gas. There was a saying that if you’re in Houston you’re either there because you’re sick or in oil. They’ve got a huge medical industry that brings a lot of value. MD Anderson has world leading cancer research. They’ve got Rice, U of H, and a ton of other schools that provide solid educations. NASA is still there. Thriving cultural district, incredible food scene. Shipping channel and port are the biggest in the Gulf (didn’t check, but I can’t think of others that would do more). Anything you can want, from any industry, most likely exists within a 1 hour drive at a world class level. This is true of any big city, but I’m not sure that oil going away will just cause Houston to fold up and close shop. Houston has been through booms and busts before and I’d say they’re more ready to handle moving away from Oil now more than ever, and getting more ready every year. It’s a scrappy town that takes punches, puts in work, and helps eachother get back on their feet (See Hurricane Harvey). If I had to pick between Houston and Chicago, I’d pick Houston any day. Much more livable city, a way lower tax burden, and it still feels like a place where anyone can make it - and that may be driving the diversity and immigration (it’s also a sanctuary city).
unpolloloco 5y ago
Except in CA, where you get high COL, high crime, and wildfires half the year...
- frankthedog 5y ago
  The market pricing for explicit costs will be slow moving, for sure. Though I do think we are starting to see the increase in wildfires and urban crime priced in more than it was before as incidences increase. However CA gives you incredible access to nature with all the state and national parks, high sunshine which means less seasonal affective disorder, a higher likelihood to make a very high income. All of those implicit benefits show up in housing prices. Contrast that to a midwestern city: the winters will probably give you seasonal affective disorder, your income ceiling is lower, you have to drive further or fly for similar access to awe inspiring nature. IMO it’s a wash. Which taken a step further would show cost of living adjustments as generally bullshit but something businesses will try and do because they’re incentivized to.
- vidanay 5y ago
  If the wildfires don't get you, the mudslides will.
z3ugma 5y ago
It seems to me that this implicit and explicit balance change a lot faster than housing supply, tax policy, etc can keep up with. For example, several metros in Texas growing 20% in the past decade vs Chicago decreasing in population. The folks that took up residence in DFW this decade got to take advantage of a high explicit benefit and a stable implicit benefit. Maybe in another 10 years that turns into NIMBYism, intolerable traffic, decline of industries that previously supplied a lot of jobs... reducing the implicit benefit. But DFW won't be able to change its fortunes quickly enough to recover that great implicit/explicit balance in such a climate, and then it'll be the new California. One way to look at it is an an arbitrage opportunity, where you as an individual or family can relocate much more quickly than a metro area can adjust to balance its implicit and explicit costs. I'd love to see a list like this of the best place to live for you right now, based on the things you value implicitly and explicitly.

dougSF70 5y ago

I agree. I think there is some analysis to be done looking at the cost of living versus different states tax regimes. For example, Oregon has no sales tax, are everyday items more expensive. Same for Florida, zero state income tax might cause price inflation. I am also reminded of this when ever I read an article that cherry-picks one dimension that shows place x is better than place y. I am suspicious, as you point out, that you pay in other ways.

house9-2 5y ago
> Oregon has no sales tax, are everyday items more expensive. Nope. At least I didn't notice that when I lived there (2012 - 2017). Income tax is higher than most states but still less than California.

mlac 5y ago

To some extent, but there are definitely regional differences. Living in Boston is just more expensive than living in Houston. Controlling for everything else, Boston just doesn’t have the land or labor available to build houses like Houston can. This makes it cheaper. Then factor in no state tax and generally reduced gov fees of Texas, and it’s a lot easier to have a higher quality of life (in the material sense) in Houston than in Boston. I do think this impacts a number of things, including diversity and reduced barriers to achieving success (Houston is the most diverse city in the country).

z3ugma 5y ago
I feel like in the long run this balances out and that's part of what's priced into the COL. Houstonians are in a boomtown getting a temporary advantage that could be offset in the long run, whether by industrial decline, climate change and severe weather, traffic, or some other factor. Boston does have a Superfund industrial past to reckon with and a lot of outlying MA cities like Worcester, Lowell, Fall River are definitely not balancing out on the implicit/explicit scale by comparison to Boston. What is the "core" of Houston that will retain its benefit when the tides turn?
- mlac 5y ago
  Assuming by the tide you mean oil and gas. There was a saying that if you’re in Houston you’re either there because you’re sick or in oil. They’ve got a huge medical industry that brings a lot of value. MD Anderson has world leading cancer research. They’ve got Rice, U of H, and a ton of other schools that provide solid educations. NASA is still there. Thriving cultural district, incredible food scene. Shipping channel and port are the biggest in the Gulf (didn’t check, but I can’t think of others that would do more). Anything you can want, from any industry, most likely exists within a 1 hour drive at a world class level. This is true of any big city, but I’m not sure that oil going away will just cause Houston to fold up and close shop. Houston has been through booms and busts before and I’d say they’re more ready to handle moving away from Oil now more than ever, and getting more ready every year. It’s a scrappy town that takes punches, puts in work, and helps eachother get back on their feet (See Hurricane Harvey). If I had to pick between Houston and Chicago, I’d pick Houston any day. Much more livable city, a way lower tax burden, and it still feels like a place where anyone can make it - and that may be driving the diversity and immigration (it’s also a sanctuary city).

unpolloloco 5y ago

Except in CA, where you get high COL, high crime, and wildfires half the year...

frankthedog 5y ago
The market pricing for explicit costs will be slow moving, for sure. Though I do think we are starting to see the increase in wildfires and urban crime priced in more than it was before as incidences increase. However CA gives you incredible access to nature with all the state and national parks, high sunshine which means less seasonal affective disorder, a higher likelihood to make a very high income. All of those implicit benefits show up in housing prices. Contrast that to a midwestern city: the winters will probably give you seasonal affective disorder, your income ceiling is lower, you have to drive further or fly for similar access to awe inspiring nature. IMO it’s a wash. Which taken a step further would show cost of living adjustments as generally bullshit but something businesses will try and do because they’re incentivized to.
vidanay 5y ago
If the wildfires don't get you, the mudslides will.

z3ugma 5y ago

It seems to me that this implicit and explicit balance change a lot faster than housing supply, tax policy, etc can keep up with. For example, several metros in Texas growing 20% in the past decade vs Chicago decreasing in population. The folks that took up residence in DFW this decade got to take advantage of a high explicit benefit and a stable implicit benefit. Maybe in another 10 years that turns into NIMBYism, intolerable traffic, decline of industries that previously supplied a lot of jobs... reducing the implicit benefit. But DFW won't be able to change its fortunes quickly enough to recover that great implicit/explicit balance in such a climate, and then it'll be the new California. One way to look at it is an an arbitrage opportunity, where you as an individual or family can relocate much more quickly than a metro area can adjust to balance its implicit and explicit costs. I'd love to see a list like this of the best place to live for you right now, based on the things you value implicitly and explicitly.