Sunday, September 20, 2009

Where to get the most bang for your buck (updated)

Three years ago, I presented a listing of countries by how much purchasing power an American would have in each of them if he liquidated his domestic assets and made the new place home. It remains one of the top posts for bringing people in from search engines and I have received frequent email requests for it to be updated. It's worthy enough an endeavor since, uh, something or another went down between 2006 and 2009 (or, more accurately, between 2005 and 2008, the years in which the respective data sets were gathered).

The methodology is simple. At the official exchange rate with the US, each country's GDP is compared to the CIA's best estimate of each country's respective GDP in terms of purchasing power parity. Currency fluctuations, regional differences within nations, and the inherent problems in creating a (sometimes hypothetical) basket of items to be purchased comparatively (postnatal infant care in Angola is cheap, but there are obviously qualititative differences to the caliber of care available in Singapore), do not lead to exact cost-of-living comparisons, but they do provide a nice way to compare generally how far your dollars will go in different parts of the world.

The greater the exchange rate (all data is in US dollars at the GDP level) compared to purchasing power parity, the more stuff you'll be able to buy with the dollars exchanged in the foreign country under examination. Conceptually, imagine you can get $10 Eagle for $1 US. In Eagleland, a skip sandwich only costs $2 Eagle. It costs $1 US at home. So for your US dollar, you can buy one skip sandwich in the US (costing $1 US), or you can exchange your US dollar for $10 Eagle and buy five skip sandwiches (costing $2 Eagle a piece) in Eagleland. Sweet! Except Eagleland probably trades what it offers in cheap goods (and services) with things like rampant poverty, political instability, and underdevelopment.

The ideal runaway spot is a place that is simultaneously modern and allows you to live like a king. What follows is a rank order listing of countries by exchange rate-PPP ratio as a percentile for which 2008 data and estimates are available. A value over 100% means your dollars will go further than they will in the US; a value under 100% means they won't go as far they will at home.

1. East Timor -- 505.0%
2. Kiribati -- 423.0%
3. Burundi -- 282.2%
4. Gambia -- 281.2%
5. Malawi -- 276.7%
6. Egypt -- 273.6%
7. Bangaldesh -- 273.4%
8. India -- 272.5%
9. Uganda -- 271.0%
10. Vietnam -- 269.1%
11. Ethiopia -- 268.0%
12. Eritrea -- 266.7%
13. Laos -- 265.8%
14. Nicaragua -- 264.4%
15. Guyana -- 262.5%
16. Bhutan -- 257.6%
17. Uzbekistan -- 256.7%
18. Tajikistan -- 256.3%
19. Pakistan -- 255.0%
20. Cambodia -- 249.9%
21. Bolivia -- 248.5%
22. Nepal -- 244.7%
23. Iran -- 244.1%
24. Honduras -- 238.6%
25. Guinea -- 233.4%
26. Sri Lanka -- 232.0%
27. Kyrgyzstan -- 229.9%
28. Solomon Islands -- 227.9%
29. Burkina Faso -- 219.9%
30. Sierra Leone -- 219.2%
31. Tanzania -- 218.4%
32. Rwanda -- 217.7%
33. Madagascar -- 217.5%
34. Tonga -- 212.8%
35. Somalia -- 212.5%
36. Ghana -- 212.2%
37. Seychelles -- 205.6%
38. Ecuador -- 204.9%
39. Yemen -- 203.6%
40. Kenya -- 203.4%
41. Lesotho -- 203.3%
42. Burma -- 202.8%
43. Tunisia -- 202.5%
44. Botswana -- 201.0%
45. Swaziland -- 200.6%
46. Thailand -- 200.4%
47. Mauritania -- 199.6%
48. Cuba -- 197.8%
49. Dominica -- 197.7%
50. El Salvador -- 197.2%
51. Macedonia -- 196.3%
52. Mozambique -- 196.2%
53. Guinea-Bissau -- 196.1%
54. Samoa -- 195.3%
55. Peru -- 193.8%
56. Djibouti -- 192.0%
57. Belarus -- 189.3%
58. Ukraine -- 189.1%
59. Chad -- 189.0%
60. Philippines -- 188.3%
61. Niger -- 186.7%
62. Benin -- 184.9%
63. Afghanistan -- 184.7%
64. Cameroon -- 184.0%
65. Belize -- 183.6%
66. Liberia -- 182.5%
67. Grenada -- 181.7%
68. Taiwan -- 181.4%
69. China -- 181.1%
70. Paraguay -- 180.4%
71. Syria -- 180.3%
72. Bulgaria -- 180.3%
73. Mongolia -- 180.2%
74. Indonesia -- 178.7%
75. Dem. Rep. of the Congo -- 178.1%
76. Saint Vincent and Grenadines -- 178.0%
77. South Africa -- 177.1%
78. Togo -- 177.1%
79. Guatemala -- 176.0%
80. Argentina -- 175.8%
81. Mauritius -- 174.8%
82. Moldova -- 174.2%
83. Saint Lucia -- 173.5%
84. Malaysia -- 173.0%
85. Vanuatu -- 172.5%
86. Dominican Republic -- 171.1%
87. Albania -- 168.3%
88. Panama -- 168.2%
89. Azerbaijan -- 167.3%
90. Georgia -- 167.1%
91. Mali -- 166.1%
92. Haiti -- 165.4%
93. Senegal -- 164.6%
94. Colombia -- 164.3%
95. Papua New Guina -- 163.2%
96. Costa Rica -- 162.0%
97. Bosnia -- 160.8%
98. Serbia -- 160.5%
99. Central African Republic -- 160.1%
100. Morocco -- 158.1%
101. Jordan -- 157.8%
102. Armenia -- 157.3%
103. Sao Tome -- 157.1%
104. Nambia -- 156.7%
105. Nigeria -- 156.4%
106. Lebanon -- 152.2%
107. Sudan -- 152.1%
108. Barbados -- 147.3%
109. Algeria -- 145.8%
110. Gabon -- 145.4%
111. Jamaica -- 145.2%
112. Chile -- 144.2%
113. Cote d'Ivoire -- 144.0%
114. Mexico -- 143.7%
115. Suriname -- 142.6%
116. Rep. of the Congo --142.5%
117. Hong Kong -- 142.2%
118. Montenegro -- 142.2%
119. Comoros -- 141.2%
120. South Korea -- 141.0%
121. Brunei -- 139.2%
122. Maldives -- 136.3%
123. Romania -- 135.9%
124. Russia -- 135.1%
125. Lithuania -- 133.9%
126. Uruguay -- 133.8%
127. Kazakhstan -- 133.0%
128. Angola -- 132.3%
129. Singapore -- 130.5%
130. Slovenia -- 130.0%
131. Oman -- 127.4%
132. Poland -- 127.0%
133. Brazil -- 126.7%
134. Bahrain -- 126.3%
135. Hungary -- 125.8%
136. Slovakia -- 125.3%
137. Equatorial Guinea -- 123.9%
138. Turkey -- 123.8%
139. Zambia -- 122.2%
140. Czech Republic -- 122.2%
141. Bahamas -- 121.8%
142. Saudi Arabia -- 119.7%
143. Malta -- 119.5%
144. Croatia -- 118.8%
145. Estonia -- 118.0%
146. Trinidad and Tobago -- 116.9%
147. Iraq -- 114.3%
148. Latvia -- 114.1%
149. Venezuela -- 111.9%
150. Turkmenistan -- 100.6%
151. Israel -- 99.8%
152. Fiji -- 99.7%
153. Portugal -- 96.7%
154. Greece -- 95.9%
155. Cape Verde -- 94.4%
156. Kuwait -- 94.3%
157. Cyprus -- 91.0%
158. New Zealand -- 90.8%
159. Qatar -- 89.3%
160. Libya -- 88.7%
161. Japan -- 87.9%
162. Spain -- 87.0%
163. Canada -- 86.0%
164. Liechtenstein -- 83.3%
165. Great Britain -- 83.2%
166. Marshall Islands -- 82.6%
167. Macau -- 82.3%
168. Germany -- 79.6%
169. Austria -- 79.3%
170. Australia -- 79.1%
171. Italy -- 78.8%
172. The Netherlands -- 77.3%
173. Belgium -- 76.9%
174. France -- 74.2%
175. Iceland -- 72.4%
176. Luxembourg -- 71.6%
177. Sweden -- 71.0%
178. United Arab Emirates -- 70.9%
179. Finland -- 70.6%
180. Ireland -- 68.9%
181. Switzerland -- 64.3%
182. Norway -- 60.4%
183. Denmark -- 59.4%
184. Zimbabwe -- 18.2% [!]

When I did the same analysis three years ago, Zimbabwe came out as the second best spot to stretch US dollars to their purchasing power limits. Using CIA statistics this time around places it at the very bottom, beating out places like Denmark, Norway, and Switzerland for the most prohibitively expensive place to move to. After suffering tragically absurd levels--midway through 2008, $25 billion would buy you an orange--of inflation for most of its post-independence history, Zimbabwe indefinitely suspended its currency. Foreign currencies are now used in its stead. The CIA factbook noted the following in reporting Zimbabwean GDP at the US exchange rate in 2008:
Hyperinflation and the plunging value of the Zimbabwean dollar makes Zimbabwe's GDP at the official exchange rate a highly inaccurate statistic.
It is the only country for which such a disclaimer is added, and as such, Zimbabwe's placement in this list should be disregarded entirely.

One thing that jumps out immediately in comparing the updated list to that of three years ago is how far the purchasing power of the US economy has fallen relative to that of the rest of the world. The average country dropped 92 percentage points from then to now--that is, for a country where the purchasing power of a US dollar was 300% of the US dollar's official exchange rate with that country three years ago, it is now only 208% (no population adjustments made, but the trend is obvious even without doing so).

Money from America isn't going nearly as far as it did even three years ago. We are experiencing an adjustment in our standard of living that is placing the US more in line with other 'developed' nations given the realities of our demographic composition. A couple of quiz questions for perspective: Which company has the highest market cap in the world? It's not Exxon-Mobil, Microsoft, Walmart, or GE. It's PetroChina. Which union has the largest economy in the world? Before the recession, it was the US, but today that honor goes to the EU.

Kiribati is the only "country"--it's composed of 33 separate islands--among the top 25 that I am fancifully able to consider as a prospective home*. Keep toiling away in the salt mines for another decade and then settle on one of the atolls, find work in the local service industry to keep my hands from idling, and soak up the South Pacific sun. Paradise. It's a self-sustaining plan for the future, if nothing else. But what suppine slothfulness, quitting life in your thirties! If peak oil pessimism, an inverted age pyramid, and demographic decay cause the US economy to implode, it's something I could do with a pretty clear conscience.

Although it has become more costly with the recession, Taiwan remains the first-world's least expensive destination (Hong Kong, the next cheapest, is probably more holistically attractive, since it's easier to function as an Anglophone there than in Taiwan). Among Western European nations, Malta is the best deal. Portugal is the runner-up, but even the Iberian Peninsula will set an American back monetarily--in every country in Western Europe save Malta, exchanging your dollars for Euros (or kronas or pounds or whatever) will result in diminished purchasing power relative to what is enjoyed stateside.

For the obscure avatar in Earthbound who asserted that if he found a $1 million diamond, he'd sell it and then go live the high life in Japan, he'll be able to buy $16,000 more worth of stuff as a reward for sitting on the gem over the last three years. Unlike most of Western Europe, which has become even more expensive than before, Japan is marginally more affordable than it had been.

* Unless I follow the dreamy aspiration of working for a sub-Sahara African government's anti-poaching unit, perhaps for the Zambia Wildlife Authority. My US earnings will carry me pretty far anywhere on the continent south of the desert.



19 comments:

Jokah Macpherson said...

Very interesting list (I was not a reader when the first one came out). I think that the comparison problems with using purchasing power parity are somewhat offset, depending on your situation, with the effect on the cost of, "keeping up appearances." When you move to Kiribati or whatever, I would imagine there's less social pressure to live beyond your means. You can live the life of an ascetic hermit and spend all your time providing us with interesting blog posts!

"Except Eagleland probably trades what it offers in cheap goods (and services) with things like rampant poverty, political instability, and underdevelopment."

Although the cost of STEAK and a good night of ROCKIN is comparatively cheaper, there's the minor issue of constant attacks from parking meters and cups of latte to consider.

Anonymous said...

Kiribati would only be good if you don't believe in global warming. The people of Kiribati do, and they are preparing for when their country is no more, as their islands slowly drown. I suggest picking the tallest island just to be safe.

agnostic said...

I'd go with Bulgaria or Costa Rica.

ironrailsironweights said...

Vietnam (#10) might be sort of tolerable. Tunisia (#43) is said to be increasingly prosperous and to some extent Westernized. Thailand (#46) is probably the highest safe choice. In fact I believe quite a few Americans have moved there.

Assuming you're a white American, and want to live somewhere where you don't look physically different than the locals, you'd have to go to Macedonia at #51.

Query: could the hypothetical American's assets be enough for him to her to enjoy an upper-class life in India, insulated from that county's problems?

Peter

Stopped Clock said...

Earlier this summer when temperatures in India were hovering around 120°F, the electricity demand exceeded supply and the power cut out in some major northern cities. This triggered protests led by people whose air conditioners wouldn't work, apparently ambivalent about the fact that the vast majority of the people in their cities never had air conditioning to begin with.

I get the impression the poor and the rich live side by side to a much greater extent than happens anywhere in America, and that only their unique culture prevents the huge crime wave that would inevitably occur if the United States were exposed to the same situations.

Stopped Clock said...

This is good, Audacious ... if your blog is attracting spammers that probably means it's attracting readers.

Audacious Epigone said...

Jokah,

I would imagine that would be the case outside of the first world generally, but especially outside of Western Europe and its direct descendants. If you lived in Nara, Japan would you be as worried about keeping up with the Suzukis as you do with the Jones now?

Nourishing condiments, Saturn Valley, and the Lost Underworld--I'll even put up with attacks from new age retro hippies and mad taxis for that!

Anon,

If the natives are concerned that CAGW is going to flood their islands, then the place should only get relatively cheaper going forward as people emigrate to avoid drowning and hesitate to immigrate for the same reason. Sounds like gravy to me.

Agnostic,

Costa Rica isn't novel, but why Bulgaria? I'm guessing there is not too much sun to damage your skin and the girls are hot and marry older guys.

Peter,

Thailand seems to be especially popular with libertarian types. Charles Murray seems to have really been enchanted with the country.

Although it's considered 'moderate/tolerant' by ME/North African standards, I'll pass on Tunisia. The idea of living in a majority-Muslim country simply doesn't appeal to me.

SC,

India is probably the most perplexing country in the world (Indians I know tell me the same!).

Re: the spamming, it's getting really tedious. I'm considering turning on blogger's word verification feature to cut down on the least sophisticated of it, much as I'd like to spare commenters from that nuisance.

MONEY said...

what do you think of this website it suggest Paraguay is the cheapest? http://www.associatedcontent.com/article/566147/top_5_cheapest_countries_in_the_world.html?cat=3

agnostic said...

I put up a post on where girls are most attracted to older guys, and southeastern Europe stood out as favorable. And Bulgarian girls have a wonderfully exotic look. Could be due to admixture from Gypsies (they have the largest population of them).

The climate is varied, too. Something for everyone. Not to mention some great looking buildings, especially their monasteries.

Audacious Epigone said...

Money,

I'd like to see the methodology behind that survey. I find it difficult to believe that middling countries like Paraguay, Argentina, and the Philippines are more affordable, monetarily, than third-world spots where people manage to live on $1 a day.

Anonymous said...

This is pretty much listed in inverse order of attractiveness. Your money goes farther in a shitty country... yaay.

We're well into the 120s before we hit a country I'd seriously consider living in. Oh well!

DaveinHackensack said...

It seems hard to believe that Hong Kong is more affordable than the U.S.

Argentina seems like one of the better bets for an ex-pat.

Anonymous said...

Hong Kong is tremendously expensive. You can't live there unless you have a local job or else you're spending a lottery jackpot.

Anonymous said...

Based on experience, Vietnam and China are extremely cheap- many locals live on less than $5 a day. But it's noisy, polluted and you get pestered a LOT as a Westerner.

One advantage to places like Vietnam, China, India and Thailand is that you can get good quality clothing made at low prices. You probably can't say the same about Latin America or Africa.

I find it hard to believe that Thaiwan is more expensive than China.

There is a huge expatriate community in Shanghai. Nice weather, pretty girls, low cost of living, very international. I'd try that if I wanted to live abroad.

The problem with some of these places is that the culture would seem pretty monotonous after a few months. You could live in the capital city and have more options, but then real estate would be more expensive.

Nanonymous said...

If I didn't need to work, I'd consider Montenegro and Macedonia, followed by Argentina, Bulgaria and Peru - in that order.

All make me instantly roughly twice richer - a great bargain. All are beautiful and culture rich and sufficiently modern. With a little money, daily quality of life is at least comparable - decent house in a safe place full of educated whites of various shades.

The major downsides in all cases will be to forever become that foreigner guy and inability to deal with the local bureaucratic nuisances. If Bulgaria is anything like it was during Warsaw Block times, it's a disaster.

Anonymous said...

I would like to see a similar bang for buck study broken down by U.S. State and including elements such as environment, health insurance, state taxes, IQ, house, food and utility prices, and obviously crime demographics, etc.

It is difficult to incorporate critical quality factors as well. For instance, housing in New Zealand is generally uninsulated and of poor quality. So a 200K house in Indiana will deliver more quality (fewer repairs, lower power bills in spite of the colder weather believe it or not) than its New Zealand equivalent after currency conversion.

Kiribati - nuclear fallout
http://www.physorg.com/news171537347.html

Great for a visit, maybe not to live there:
http://www.amazon.com/Sex-Lives-Cannibals-Equatorial-Pacific/product-reviews/0767915305/ref=dp_top_cm_cr_acr_txt?ie=UTF8&showViewpoints=1

Sometimes ya gets whatcha pays for. ;D

Anonymous said...

I'd also like to mention health care. By the time you are ready to retire in a cheap place, you had better consider that some of these countries will not have state-of-the-art health facilities. Even if you "go private".

New Zealand rations its public care according to strict algorithms. As an elder, you may be adjudged as "not being worth the scarce public funds to treat" and slotted into a hospice to die with a niggardly bit of morphine that might even be stolen by the employees - big drug problem in New Zealand, and no one has any cash. High cost of living, entitlement society, angry natives.

Consider too that in some of these areas, regardless of how simply you choose to live, you will be a rich white North American, and they will never be persuaded that you don't have piles of shekels stashed away. You will constantly be hit up by mooches and people trying to "get at your stash" in creative ways with miscellaneous claims. "Whiplash!"

I have lived this and I am anxious to return home to the States, regardless of the doomsday predictions.

DavidInSydney said...

I like this list, thank you. Time to update again?

Anonymous said...

This is very useful information. Thank you very much for doing this work and posting it. I think things have improved somewhat since 2009 with respect to the exchange rate and purchasing power of the US dollar overseas. I was wondering if you think you might update this analysis in 2013 by chance? Or did you already do it in 2012 and I am missing it? Thank you.