Economic Perspective: Costs of Living

NC State College of Agriculture and Life Sciences professor Dr. Mike Walden working in a recording studio.

MARY WALDEN:

“Today’s program looks at cost of living comparisons. Mike, we frequently talk about the cost of living, and how it changes each year. But the discussion occurs as if there is one cost of living in the entire country. Is this an assumption that is accurate?”

MIKE WALDEN:

“It’s really not accurate. There’s plenty of evidence that the cost of living does vary by location. A major reason is cost of housing. Land values, hence housing values, are going to be much higher in big cities where land is scarcer and people want to move to. And so you’re going see those states that have large cities like New York tend to have larger cost of living.”

“There’ve been studies by universities, as well as the federal government, that do provide some data on variations, and the good news, the good news for North Carolina is we tend to have a cost of living for the state that’s under the national average. In fact, it could be as low as 10 percent under the national average.”

“Now what this means is if you’re looking at a dollar of spending somewhere else in the country, really you need to only spend 90 cents in order to get that same purchase. So you need to take this into account when you’re comparing wages and other kinds of costs. Now this is not to say that the cost of living is the same across North Carolina also. Although we don’t have as good of data, we do know for example that the big cities like Charlotte, Raleigh, Greensboro and Winston-Salem, land values, housing values, rents are all going to be higher than our rural areas. That’s one benefit of living outside the big cities.” 

Mike Walden is a William Neal Reynolds Distinguished Professor in the Department of Agricultural and Resource Economics at North Carolina State University who teaches and writes on personal finance, economic outlook and public policy.

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