by Patrick Appel
A reader writes:
Your reader states:
"An Ipod in San Francisco costs the exactly the same as it does in Idaho. This is true for cars, big macs, and a whole range of products that are marketed nationally."
He/she is mistaken on two counts. First of all, housing takes up the a huge portion of a family's income (>30%), so changes to that expenditure have a much more dramatic affect on living standards than does the price of an iPod. Other large portions of a family income are spent on food (>10%), gas (>5%), utilities (7%), insurance and other items. These vary dramatically between regions. We live in San Francisco. A pound of bananas is 79 cents, the same pound of bananas is 48 cents at the store near my in-law's house in Utah. Gas is over 3 dollars a gallon in SF, it's 2.40 here. Etc. Secondly, he's wrong about the cost of cars and other items costing the same between regions. A big mac is more expensive in SF than in Provo, UT. We buy our furniture, cars and other big ticket items in Utah and drive them back to SF because the stores are cheap enough here that it makes it worth the expense. But I'll grant the reader the cost of an iPod is the same in both places.
Another reader contests even the iPod:
Yes, prices of consumer electronics are fairly standardized throughout the country, but health care? Groceries? Clothing? Insurance? Utilities? Taxes? Fast food meals in any big city are noticeably more expensive than they are in the suburbs. This is not to mention the fact that that iPod is going to be more expensive in New York than in Tallahassee due to sales tax.
An final reader:
My wife and I make, combined, just over 100K per year. We have two small children in day care. We live in the suburbs of Chicago. To say we have the same purchasing power for luxury items as a similar couple living in rural TN is kind of crazy. To live within a reasonable commute to our jobs, a small three bedroom house would cost us well over 300K dollars. How much does that leave us for actual purchasing? Not much. Now, we realize that these are choices we make, and we love the variety and choice our location gives us for anything from culture and museums to sports. But, if you'll allow me a bit of all-caps, to the reader that said the above, HOUSING IS A MUCH LARGER PART OF THE NATIONAL ECONOMY THAN IPODS.