Visualized: Regional Price Parity For Each State
Purchasing power is a great way to compare how expensive things are between one place and another. One of the most common ways economists do this is by measuring regional price parity, which allows us to stack rank the most expensive (and cheapest) states for everyday goods and services.
- Hawaii is the most expensive state in the country for everyday items and services, with a price parity score of 119.3, or 19.3% above the national average.
- At the opposite end of the spectrum, Mississippi is the least expensive with a price parity score coming in at 84.4%, below every other state and significantly lower than the national average.
- Delaware and Florida are the two closest to the national average in terms of price parity (99.4 and 101, respectively).
- More populous states along the East and West Coasts tend to have higher costs of living than the Midwest and South, highlighting a key reason why people move to warmer climates during retirement.
We found the dataset for our visual at the U.S. Bureau of Economic Analysis. The underlying numbers reflect prices across states as of December 2020. You can read the detailed methodology behind the researchers’ analysis, but in short, the numbers represent the relative expense between geographies at a given point in time. For example, Maryland has a price parity of 107.7, meaning that on average things cost 7.7% more in Hawaii than the U.S. as a whole. The result of our visual is an intuitive snapshot of the most expensive (and cheapest) states to live in across the country.
It’s unsurprising that Hawaii tops the charts as the most expensive state in the country. Almost all the consumer goods purchased on the Hawaiin Islands have to be flown in or transported by boat. It’s not cheap to live in tropical paradise, and with a price parity score of 119.3, residents are paying almost 20% more just to live there.
Setting Hawaii aside as a clear outlier, the continental U.S. states generally fall into two groups. At one end of the expense spectrum, populous coastal states like California (116.4), New York (116.3) and New Jersey (116) have extremely high costs of living. Consumers pay a lot more for everyday items in those states compared to the national average. And in the other group, Southern and Midwestern states boast relatively low price parity numbers. Mississippi is the cheapest in the country (84.4), followed by Arkansas (84.7) and Alabama (85.8). Ohio (88.4), Indiana (88.7) and Iowa (89) aren’t too far away from the bottom tier either. Delaware and Florida (99.4 and 101, respectively) are the closest to the national average.
The rise of remote work during the coronavirus pandemic is leading a lot of people to leave expensive cities like San Francisco and New York in search of more space at a lower cost. Although COVID-19 hasn’t completely rewritten the rules for where millions of people want to live, it has opened up new possibilities. In this sense our visualization highlights some different states, like Mississippi and Alabama, that are worth considering for their high levels of cost savings.
Are you working remote during the pandemic? Have you moved to a new state to save on cost? Let us know your story in the comments.