Spend enough time traveling around the United States and you’re bound to notice a dramatic variation in what a dollar can buy.
Everything from the price of a cup of coffee to the cost of a house can fluctuate between, and even within, states.
A gallon of regular gas costs $2.74 in Hawaii, but just $1.82 in South Carolina.
The average Connecticut resident pays twice as much for electricity as the average Tennessee resident.
A $7 lager in San Francisco might cost you half as much in Chicago. A $5 hamburger in California may be a dollar cheaper in Nebraska.
Tuition at public colleges varies by orders of magnitude.
Fortunately for the confused consumer, the federal government now measures these variations.
For a few years now, the agency that tracks gross domestic product, personal income and other economic indicators has also produced what it calls Regional Price Parities, measures of price fluctuations across states and metropolitan areas.
That data, published in July by the Bureau of Economic Analysis, shows that a dollar can swing by more than 30 percent in terms of what it can buy.
“Regional price differences are strikingly large; real purchasing power is 36 percent greater in Mississippi than it is in the District of Columbia,” Alan Cole, an economist with the Tax Foundation, a think tank, noted last week in a blog post.
To better understand, imagine a store offering a range of goods and services, each for sale at the national-average price for that particular item. Now, imagine a shopping cart filled with $100 worth of items from that store.
In Hawaii, $100 buys about 85 percent of the goods in the cart thanks to the high prices there. In other words, $100 in Hawaii feels more like $85.60, compared to the national average.
In Mississippi, the opposite is true. With $100, you would be able to buy the cart’s contents and more: the equivalent of $115.30 of goods and services from the national-average store.
The relative value of $100 in each state
This map shows the purchasing power of $100 in each state, based on the national average prices of a variety of goods and services. …
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