The Cost of living Index

You can find the cost of living index for every major urban city and State on our home page

What is The Cost of Living Index?

A cost of living index is a measuring stick on pricing in various categories. It is meant to approximate the price of goods and services in different regions.

It is important to keep in mind that the cost of living index is based in mathematical theory. The cost of living index and the consumer price index often get mistaken for one another. So it is also important to note that the CPI is just one of the factors used with in the cost of living index.

A cost of living index is broken into six different categories. These subdivisions of the index carry a certain amount of weight towards the overall cost of living or the composite index.

The categories with in the cost of living index are Grocery Items,Housing,Utilities, Healthcare, Goods and services and transportation. Consider the following table which breaks down the weight of each item in the index.

• Groceries- 13 percent
• Housing- 29 percent
• Utilities- 10 percent
• Healthcare- 4 percent
• transportation 12 percent
• Goods and services- 32 percent

How is The Cost of Living Index is Calculated

The mathematical theory behind the cost of living index was invented by Russian economist A. A. Konus.

Part of the calculation is the consumer cost function C(u,p) which is the cost for the consumer to achieve the maximum utility for their money.

By comparing the cost to maintain a certain standard of living in the current year to the previous is how cost of living is measured. The only issue is that utility or maximum value on dollars spent is assumptive and is impossible to measure.

Cost of Living Index by City

Visit our Home Page to view the city cost of living index breakdown.