What happens when the cost-of-living index is negative?
Quality of life What is the cost of living index? The cost-of-living index, or general index, shows the difference in living costs between cities. The cost of living in the base city is always expressed as 100. The cost of living in the destination is then indexed against this number. So to take a simple example, if London is the base (100) and New York is the destination, and the New York index is 120, then New York is 20% more expensive than London. Similarly, if London is the base and Budapest is the destination, and the Budapest index is 80, than the cost of living in Budapest is 80% of London’s. What’s the methodology behind the index? The cost-of-living index expresses the difference in the cost of living between any two cities in the survey. How is this index calculated? Using exactly the same price data, but different methods of calculation, a number of different people could come up with a number of markedly different indices. The challenge, therefore, when seeking to construc
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