Why do different indices rank the same city differently?

Because they use different baskets, weights, base cities and data methods. An expat-focused index weights housing and international schooling heavily; a crowd-sourced one reflects local spending. Always compare indices from the same source, and treat cross-source differences as a sign of methodological variation, not error.

What is a good base city to understand?

Most publishers name their base city (often New York = 100). Knowing it lets you read every other number as "this many percent of New York". If you know your own city’s index, you can convert any salary through it as the intermediate, which is what the Cost of Living Comparison Calculator does.

Does the index include rent?

Some indices include rent in the main figure; others publish a separate rent index. Rent is the most volatile and location-sensitive component, so check whether it is bundled in or separate before comparing two cities, and use a rent-inclusive figure for salary comparisons.

Can I use an index to set a remote-work salary?

As a starting point, yes — convert the employee’s local salary through the indices to your baseline city. But adjust for tax differences, currency stability and the role’s market rate. Indices are a guide to cost, not to the value of the work, so blend them with market-rate data.

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How Cost-of-Living Indices Are Built

A cost-of-living index turns the messy reality of prices in a city into a single comparable number. It is what powers "how much will I need to earn there?" calculations, expat package negotiations, and remote-work salary setting. But a single index hides a lot of methodological choices, and two indices for the same city can disagree because they were built differently. Understanding how they are constructed helps you use them well and avoid misleading comparisons.

This guide explains the components of a cost-of-living index — the basket, the weighting, the base city and the data collection — and what the resulting number can and cannot tell you about a city. Pair it with the Cost of Living Comparison Calculator to convert a salary between two indexed cities.

In detail

The basket of goods and services

Every index starts with a basket — a fixed list of goods and services whose prices are tracked in each city: groceries, housing, transport, utilities, healthcare, clothing, entertainment and personal care. The basket is designed to represent a typical household’s consumption. The choice of basket matters enormously: an index heavy on groceries will rank food-expensive cities high, while one heavy on housing will rank rent-expensive cities high. No basket is neutral; each reflects assumptions about what a "typical" person buys.

Weighting: not every category counts equally

After the basket is chosen, each category is given a weight reflecting its share of typical spending. Housing usually carries the largest weight, since rent or a mortgage is most households’s biggest single cost; groceries and transport follow. Weights differ between sources and between household types — an expat on a corporate package spends differently from a local family, which is why expat-focused indices (like Mercer or ECA) can rank cities differently from crowd-sourced ones (like Numbeo). The weights determine how much each price change moves the overall index.

The base city and the index scale

Index numbers are relative: they only mean something against a baseline. Most indices set a base city to 100 and express every other city as a percentage of it. A city at 85 is 15% cheaper than the base; one at 120 is 20% more expensive. The base is often New York, but not always — changing the base city changes every number, even though the underlying prices do not. Always note which base a given index uses before comparing two indices from different publishers.

Data collection and its limits

Prices are gathered by researchers (Mercer, ECA), by statistical offices, or by crowd-sourcing (Numbeo). Each method has trade-offs: researcher-led surveys are consistent but expensive and infrequent; crowd-sourced data is current and broad but self-selected and noisy. Prices also vary within a city by neighbourhood and shop type, so an index reflects an average that may not match your own spending pattern. Indices are best read as directional — "city A is broadly pricier than city B" — not as a precise personal cost.

What an index cannot tell you

A cost-of-living index does not account for income tax, social contributions, public services, or quality of life — all of which shape how far a salary goes. Two cities with identical indices can leave you with very different net income after tax. It also does not capture your personal consumption: if you do not drive, a city with expensive fuel matters less to you. Use the index to convert a salary for a like-for-like standard of living, then layer in tax, lifestyle and non-monetary factors separately.

Frequently asked questions

Why do different indices rank the same city differently?: Because they use different baskets, weights, base cities and data methods. An expat-focused index weights housing and international schooling heavily; a crowd-sourced one reflects local spending. Always compare indices from the same source, and treat cross-source differences as a sign of methodological variation, not error.
What is a good base city to understand?: Most publishers name their base city (often New York = 100). Knowing it lets you read every other number as "this many percent of New York". If you know your own city’s index, you can convert any salary through it as the intermediate, which is what the Cost of Living Comparison Calculator does.
Does the index include rent?: Some indices include rent in the main figure; others publish a separate rent index. Rent is the most volatile and location-sensitive component, so check whether it is bundled in or separate before comparing two cities, and use a rent-inclusive figure for salary comparisons.
Can I use an index to set a remote-work salary?: As a starting point, yes — convert the employee’s local salary through the indices to your baseline city. But adjust for tax differences, currency stability and the role’s market rate. Indices are a guide to cost, not to the value of the work, so blend them with market-rate data.

Related calculators

Concept guide based on standard cost-of-living index methodology. Published indices include Numbeo, Mercer Cost of Living, ECA International and the World Bank. Last updated: September 2026.

These guides are provided for general information only and do not constitute financial advice. Exchange rates, tax rules, customs allowances and tipping customs vary by country, provider and over time. Always confirm critical figures with the relevant authority or a qualified adviser before acting on anything here.