Ruben Laguna's blog

Jul 4, 2007 - 3 minute read - Comments - cost españa euro money parity power ppp purchasing purchasing-power-parity spain suecia sweden Uncategorized

Cost of life in different countries

I’m moving to Sweden soon and a friend of mine sent me the following link (in Spanish, sorry) about the salaries in different countries. From here, I learnt about Purchasing Power Parity and using the data from the IMF I obtained the PPP ratios from Spain, Sweden and other countries. Using this list you can translate how much worth is your money in other country. For example, roughly we can say that goods you buy in Sweden using 10000€ can be purchased in Spain for only 8058€. Or saying it in another way, if I have 10000€ in Spain I have the same purchasing power than a suede that owns 12409€. Yet another way to say it is that living in Sweden is a 19,41% more expensive than living in Spain.

Now a table with the country ranked by ther PPP ratio and the cost of life of those countries compared to Spain, negative values indicate is cheaper to life there:

Country PPP ratio 10000€ PPP Cost of life compared to Spain
Slovenia 1.30 12,962 € -28.14%
Portugal 1.24 12,383 € -22.42%
Spain 1.01 10,115 € 0.00%
United States 0.98 9,818 € 2.93%
Italy 0.97 9,665 € 4.45%
Greece 0.95 9,546 € 5.63%
Luxembourg 0.95 9,473 € 6.34%
Belgium 0.93 9,252 € 8.53%
Austria 0.92 9,215 € 8.90%
United Kingdom 0.90 8,993 € 11.09%
Finland 0.88 8,756 € 13.43%
Germany 0.87 8,726 € 13.73%
Japan 0.87 8,659 € 14.39%
France 0.86 8,630 € 14.68%
Netherlands 0.86 8,597 € 15.01%
Ireland 0.85 8,537 € 15.60%
Sweden 0.82 8,151 € 19.42%
Norway 0.64 6,355 € 37.17%

Then using the table you can quickly determine the conversion from money in Spain to money in Sweden taking into accunt the Purschasing Power Parity. (€/Spain ppp ratio)Sweden ppp ratio. So, for 10000 euros in Spain are equivalent to (10000€ euros / 1.011484) 0.815086 = 8058.31 € in Sweden. So with the same amount of euros in both countries 10000€ you end up with a purchasing power of 10114€ (10000x1.011484) in Spain and a purchasing power of 8150€(10000x0.815086) in Sweden. The same amount of money give you a 19.42% lower purchasing power in Sweden.

This is the table I used to obtain the PPP ratio from the using the IMF data. PPP = GDPppp 2005/GDP 2005

Country GDP 2005 GDPppp 2005 ppp
Austria 305.338 281.357 0.921461
Belgium 372.726 344.842 0.925189
Finland 195.785 171.43 0.875603
France 2127.168 1835.696 0.862977
Germany 2791.737 2436.004 0.872576
Greece 284.226 271.31 0.954557
Ireland 200.769 171.393 0.853683
Italy 1772.769 1713.399 0.96651
Luxembourg 36.621 34.692 0.947325
Netherlands 629.911 541.513 0.859666
Portugal 185.644 229.881 1.238289
Slovenia 34.407 44.597 1.296161
Spain 1127.975 1140.929 1.011484
Japan 4557.116 3946.09 0.865918
Norway 301.735 191.747 0.635481
Sweden 358.481 292.193 0.815086
United Kingdom 2230.608 2006.078 0.899341
United States 12455.83 12229.28 0.981812

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