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PPP is a misleading figure. If your PPP-adjusted income is 2 times higher than someone's else does it mean that you can buy 2 times more MacBooks or trips to Ko

PPP is a misleading figure. If your PPP-adjusted income is 2 times higher than someone's else does it mean that you can buy 2 times more MacBooks or trips to Korea?

ivan_gammel 3y ago
If I earn $100k somewhere in Eastern Europe, then deducting all taxes and recurring costs like health insurance, rent or mortgage, from what’s left I may be able to buy more MacBooks or trips to Korea than someone from San Francisco. It is misleading to compare just a few imported goods to make conclusions as well.
- dogma1138 3y ago
  You’ll be surprised at how much housing costs in Eastern Europe these days…
  - oneTbrain23 3y ago
    Still cheaper and sturdier than the cardboard house in USA. European houses typivally made of brivks and mortar. Cant say that in USA. Even 5mil house in San Fra, a significant portions the house is made of wood and drywall. Pounching through American wall is hollywood pastime. Cant find a similar think in other countries hollywood.
    - jandrewrogers 3y ago
      I’d like to see a European brick and mortar house survive a Magnitude 8 earthquake, which is a requirement in San Francisco. The US used to have lots of brick and mortar construction, just like Europe. After those buildings were all destroyed by strong earthquakes, they switched to steel and wood, which can survive a strong earthquake. Europe style construction is not allowed in much of the US because it demonstrably isn’t safe.
      - hibikir 3y ago
        And yet, most residential construction is basically the same, whether it's going to be built in Palo Alto, upstate NY, Kansas, south Florida or Portland. Most of those don't have anything that even resembles strong earthquake risk. American housing is built the way it is not due to extra interest in safety, but because it's cheap to build under US prices. You can call it better or worse than Europe, but it sure isn't earthquakes.
        themitigating 3y ago
        What is the advantage of using stronger building materials? Say brick vs wood frames.
        scarby2 3y ago
        It's not necessarily about strength but brick buildings will survive both fire and water much better than wooden buildings, they don't burn or rot. Brick buildings generally last hundreds of years with minimal maintenance (assuming no earthquakes). Wood buildings can last hundreds of years but require far more upkeep.
        cman1444 3y ago
        This argument kind of falls apart when you start trying to maintain or improve plumbing, HVAC, and electrical through the house. It's much easier to do that through the wood and drywall of a typical American house.
        scarby2 3y ago
        AFAIK Plumbing tends to run beneath the floors in either construction model. Electrical in brick buildings is a pain as it runs in conduit behind the plaster but this doesn't compromise the viability of your structure and has a fairly long service life. HVAC also can generally also be run under floors (and outside of the USA forced air systems are pretty unusual so you're only dealing with pipes).
  - pzo 3y ago
    Sure increased but do people spend like 3k USD/m to rent something? In Poland you can still rent something for 1k USD even in Warsaw. Go to Bulgaria and rent is dirty cheap in places like Bansko you pay $400 or less for 1 month rental even using AirBNB.
chmod775 3y ago
> PPP is a misleading figure. If your PPP-adjusted income is 2 times higher than someone's else does it mean that you can buy 2 times more MacBooks or trips to Korea? You're looking for "discretionary income" minus groceries (not to be confused with disposable income), because GDP does not tell you that (PPP adjusted or not) and PPP adjusted income doesn't tell you that either. Also you kind of made a jump from (per capita) GDP to income, which is related, but not the same thing. To answer your question: In your example it may either be more or less, because PPP really does not say much for anything but your chosen basket of goods. Example: Person A earns $2000 and spends $750 to meet standard of living X, while another person B also earns $2000 but has to spend $1500 to meet that same standard. Adjusted for PPP using that standard of living/basket of goods X, Person A earns twice as much. Let's assume that MacBooks and trips to Korea generally cost the same for both people. Person B has $500 left over to pay for such things, while Person A has $1250 left - more than twice! I easily could have chosen numbers such that it was less than twice. I could also have chosen them such that one person, while appearing richer purely based on non-adjusted income, can in fact afford less of everything. Obviously you can also make it so that one person can afford less luxuries than the other despite appearing richer adjusted for PPP. You can try to fix this by making any luxuries you're interested in part of your basket of goods. While you're still comparing an entire basket, at least you'll know how often each person could purchase that entire basket compared to each other. The point I'm trying to make is that while you still have to be careful to understand what PPP adjusted numbers are telling you, non-adjusted numbers aren't any better and in fact are probably more misleading for what you appear to be interested in.
Turskarama 3y ago
Every statistic is misleading if you read it wrong enough. Typically, I'd say GDP is _more_ misleading than PPP in almost all cases.
paganel 3y ago
Who needs MacBooks or trips to Korea if housing and groceries are (relatively) more affordable in places with higher PPP (vs. comparatively lower GDP)? I cannot live in a laptop.

PPP is a misleading figure. If your PPP-adjusted income is 2 times higher than someone's else does it mean that you can buy 2 times more MacBooks or trips to Korea?

ivan_gammel 3y ago

If I earn $100k somewhere in Eastern Europe, then deducting all taxes and recurring costs like health insurance, rent or mortgage, from what’s left I may be able to buy more MacBooks or trips to Korea than someone from San Francisco. It is misleading to compare just a few imported goods to make conclusions as well.

dogma1138 3y ago
You’ll be surprised at how much housing costs in Eastern Europe these days…
- oneTbrain23 3y ago
  Still cheaper and sturdier than the cardboard house in USA. European houses typivally made of brivks and mortar. Cant say that in USA. Even 5mil house in San Fra, a significant portions the house is made of wood and drywall. Pounching through American wall is hollywood pastime. Cant find a similar think in other countries hollywood.
  - jandrewrogers 3y ago
    I’d like to see a European brick and mortar house survive a Magnitude 8 earthquake, which is a requirement in San Francisco. The US used to have lots of brick and mortar construction, just like Europe. After those buildings were all destroyed by strong earthquakes, they switched to steel and wood, which can survive a strong earthquake. Europe style construction is not allowed in much of the US because it demonstrably isn’t safe.
    - hibikir 3y ago
      And yet, most residential construction is basically the same, whether it's going to be built in Palo Alto, upstate NY, Kansas, south Florida or Portland. Most of those don't have anything that even resembles strong earthquake risk. American housing is built the way it is not due to extra interest in safety, but because it's cheap to build under US prices. You can call it better or worse than Europe, but it sure isn't earthquakes.
      - themitigating 3y ago
        What is the advantage of using stronger building materials? Say brick vs wood frames.
        scarby2 3y ago
        It's not necessarily about strength but brick buildings will survive both fire and water much better than wooden buildings, they don't burn or rot. Brick buildings generally last hundreds of years with minimal maintenance (assuming no earthquakes). Wood buildings can last hundreds of years but require far more upkeep.
        cman1444 3y ago
        This argument kind of falls apart when you start trying to maintain or improve plumbing, HVAC, and electrical through the house. It's much easier to do that through the wood and drywall of a typical American house.
        scarby2 3y ago
        AFAIK Plumbing tends to run beneath the floors in either construction model. Electrical in brick buildings is a pain as it runs in conduit behind the plaster but this doesn't compromise the viability of your structure and has a fairly long service life. HVAC also can generally also be run under floors (and outside of the USA forced air systems are pretty unusual so you're only dealing with pipes).
- pzo 3y ago
  Sure increased but do people spend like 3k USD/m to rent something? In Poland you can still rent something for 1k USD even in Warsaw. Go to Bulgaria and rent is dirty cheap in places like Bansko you pay $400 or less for 1 month rental even using AirBNB.

chmod775 3y ago

> PPP is a misleading figure. If your PPP-adjusted income is 2 times higher than someone's else does it mean that you can buy 2 times more MacBooks or trips to Korea? You're looking for "discretionary income" minus groceries (not to be confused with disposable income), because GDP does not tell you that (PPP adjusted or not) and PPP adjusted income doesn't tell you that either. Also you kind of made a jump from (per capita) GDP to income, which is related, but not the same thing. To answer your question: In your example it may either be more or less, because PPP really does not say much for anything but your chosen basket of goods. Example: Person A earns $2000 and spends $750 to meet standard of living X, while another person B also earns $2000 but has to spend $1500 to meet that same standard. Adjusted for PPP using that standard of living/basket of goods X, Person A earns twice as much. Let's assume that MacBooks and trips to Korea generally cost the same for both people. Person B has $500 left over to pay for such things, while Person A has $1250 left - more than twice! I easily could have chosen numbers such that it was less than twice. I could also have chosen them such that one person, while appearing richer purely based on non-adjusted income, can in fact afford less of everything. Obviously you can also make it so that one person can afford less luxuries than the other despite appearing richer adjusted for PPP. You can try to fix this by making any luxuries you're interested in part of your basket of goods. While you're still comparing an entire basket, at least you'll know how often each person could purchase that entire basket compared to each other. The point I'm trying to make is that while you still have to be careful to understand what PPP adjusted numbers are telling you, non-adjusted numbers aren't any better and in fact are probably more misleading for what you appear to be interested in.

Turskarama 3y ago

Every statistic is misleading if you read it wrong enough. Typically, I'd say GDP is _more_ misleading than PPP in almost all cases.

paganel 3y ago

Who needs MacBooks or trips to Korea if housing and groceries are (relatively) more affordable in places with higher PPP (vs. comparatively lower GDP)? I cannot live in a laptop.