Is Minneapolis Really The 3rd Most Expensive City In North America?
MINNEAPOLIS (WCCO) -- Minnesotans usually love ranking high in surveys. But, a new one from the Economist Magazine has people scratching their heads, calling it "nuts" and "not even close."
The survey finds Minneapolis is the third most expensive city to live in the U.S. and the 26th in the world. So can that be true? Good Question.
"I'm more than a bit skeptical," says Jeanne Boeh, professor of economics at Augsburg University. "One of my lines I use all the time is just because it's a number doesn't mean it means anything, and it's never more true than when you start talking about price indices."
The Worldwide Cost of Living Survey compared the prices of 160 items in 133 cities. Among the products and services were food, clothes, utility bills, rent, transportation, private schools, household supplies, recreational costs and domestic help. The cost of home is not included because economists generally use rent prices or the price if someone rented out their home to measure housing costs.
Boeh says if people don't use those things in their everyday lives, the price index doesn't reflect most people's day-to-day existence.
"I think you have to remember, we're talking about the international market, not just the U.S.," says Boeh. "They're looking at you go live in Singapore, how much should you ask for an increase in your wage to cover the kinds of things you wouldn't normally buy."
According to the U.S. Bureau of Economic Analysis, the Minneapolis/St. Paul/Bloomington area ranks 42 out of 112 in regional price parities. That means if an average basket costs 100, Minneapolis/St. Paul/Bloomington is 102. That's well below Honolulu (124), San Jose/Sunnyvale/Santa Clara (124), Santa Cruz/Watsonville (122), San Francisco/Oakland/Hayward (122), New York/Newark/Jersey City (122), and Napa, California (120). Boeh says this basket of goods and services if a better measure of prices in the U.S.
"We're in the top, but we're not at the middle, we're not at the bottom and we're not at the tip-top," she says.