If you use Purchasing Power Parity to compare income between US and India, $100k/yr = ₹22 lakh.
But using PPP-based comparisons to make real world decisions on where to live is fallacious — it's closer to ₹30-37 lakh, 1.5x that!
🧵 Thread and post!
1/7
But using PPP-based comparisons to make real world decisions on where to live is fallacious — it's closer to ₹30-37 lakh, 1.5x that!
🧵 Thread and post!
1/7
Assumptions:
- Expenses for single taxpayers from age 22–30 living in the Bay Area vs Bangalore
- Lifestyle comparisons beyond goods you can buy—such as proximity to family and pollution—also aren't accounted for.
- Savings are treated as absolute, not relative
2/7
- Expenses for single taxpayers from age 22–30 living in the Bay Area vs Bangalore
- Lifestyle comparisons beyond goods you can buy—such as proximity to family and pollution—also aren't accounted for.
- Savings are treated as absolute, not relative
2/7
Why isn't PPP good enough?
PPP isn't used to compare incomes — its calculated from a weighted basket of goods for GDP comparison.
The weighting and even the goods don't apply to most — iPhones and equivalent cars are still going to be far more expensive in India!
3/7
PPP isn't used to compare incomes — its calculated from a weighted basket of goods for GDP comparison.
The weighting and even the goods don't apply to most — iPhones and equivalent cars are still going to be far more expensive in India!
3/7
Many other factors matter for "effective" PPP:
—Stage of life
—Absolute wealth
—Country-specific spending differences
—Similar quality services are priced differently
—Savings should be considered absolute
—Lifestyle differences
Simply dropping a PPP of 22 doesn't work well
4/7
—Stage of life
—Absolute wealth
—Country-specific spending differences
—Similar quality services are priced differently
—Savings should be considered absolute
—Lifestyle differences
Simply dropping a PPP of 22 doesn't work well
4/7
In the US, according to my spending estimates, if you make $100k, you'll save ~$22k a year.
To save an equivalent amount in India, you'd need ₹37 lakh, for an effective PPP of 37.
Post: debarghyadas.com/writes/ppp/
5/7
To save an equivalent amount in India, you'd need ₹37 lakh, for an effective PPP of 37.
Post: debarghyadas.com/writes/ppp/
5/7
Why should you equate savings if spending habits are different?
For big-ticket long term spending like ssupporting parents, a house, a US-based college education and international travel, money can be treated as an absolute.
Even if you relax that, I'd say ~₹30 lakh.
6/7
For big-ticket long term spending like ssupporting parents, a house, a US-based college education and international travel, money can be treated as an absolute.
Even if you relax that, I'd say ~₹30 lakh.
6/7
Its worth mentioning that jobs in India also:
- Require longer hours
- Don't increase in salary as much
- Are fewer than the US
This comparison doesn't account for this.
I don't make a recommendation on where you should live—that's more complex and personal.
7/7
- Require longer hours
- Don't increase in salary as much
- Are fewer than the US
This comparison doesn't account for this.
I don't make a recommendation on where you should live—that's more complex and personal.
7/7
Okay I knew there were going to be disagreements with the assumptions: it would help if instead of just pointing out an expense you disagree with, point out an alternate figure.
I cant edit the tweet but I'll update the post with the new assumptions!
I cant edit the tweet but I'll update the post with the new assumptions!
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