What Is Numbeo.com About?

I came on this site Numbeo.com by accident a few days ago. It addresses a question I have wondered about from time to time, and what I found leads to many more questions.

Its thesis is that there is a way to compare livability factors in one city to another city. I have friends from Albania, so I compared Tirana to Peterborough, Ontario for the cost of living.

Not surprisingly, Peterborough was higher. About 80% higher.

How it is organized

There are nine cost areas, each with several specifics. I tried to avoid things like domestic beer because I have no knowledge of the local beer in Albania, but examining imported beer in a restaurant, I find Peterborough is 180% more expensive. $8.00 versus $2.85. Again I don’t know if that is comparing Heinekin in each place or Heineken in Peterborough and some other bottle imported to Albania from Romania. The best assessment is restaurant beer in Canada costs more than in Albania.

In other areas of interest, I found apples cost three and a half times as much here, but bananas are 40% cheaper.

The local bus fare here is more than 5 times what it is in Tirana. Gas is less costly here, as you would expect, and monthly basic services for an apartment are more here but very hard to measure. Some things are included in the rent here, so it is hard to compare. Maybe the total would be worthwhile to compare.

The obvious flaws

Numero is a wiki which means anyone can edit it. Therefore the numbers are not necessarily meaningful as specific amounts. If you care, you would be forced to do more detailed research. Wikipedia, another wiki, claims the numbers are easy to manipulate and, given the relatively few contributors, possible. With many contributors, you could expect errors to correct quickly. Maybe in the future.

The numbers rely on observations, and there is no evidence for validity or a range of values.

Some terms are very broad. “Meal, inexpensive restaurant,” for example.

You can’t rely on precision but must think in terms of generality. The 80% higher cost overall is likely reasonable, although the details may be wrong. If you have many variables for each one, you are likely to be wrong but not necessarily in one direction. Some will be too high, others too low, and so if you have many variables, the generality will tend to be close.

The cost of living is not the only area of study.

You can assess the quality of life across many variables. Crime, healthcare, pollution, commute time, and housing.

Where it has value to people

There are two that interest me. Your interests are likely different.

  1. If someone wanted to move to a new place, what variables could they assess before deciding? The general overview is first followed by a more detailed study.
  2. A way to assess “social overhead.”

Social overhead

There is no such thing as free, so even if you don’t pay for something, it still has a cost. If you have a government-funded healthcare system in Canada, you must assume that cost will be passed on to you in prices or taxes.

I have often wondered whether some element of regulation or other costs spills over into everything. Wages are easy to see. If waiters earn $15 an hour in Canada and $3 an hour in Albania, it is reasonable to assume that a meal here will cost more. Labour is about 30% of the tab here. Same thing with the food. Health standards may be more here; refrigeration and other costs also add up. How much waste is there because of the rules? One way and another, food costs at least 25% of the tab.

The other 45% is overhead of one kind or another. Waste disposal is a big number, rent is much higher here, hydro, heat, insurance, municipal taxes, and a dozen others are more here.

The customer pays a fair price, given the restaurant owner’s costs. The question is, how much of the social overhead is necessary. Do we get our money’s worth? The restaurant can’t reduce the price if you get too little for your money. Look to the maze of government rules and mandates that add cost with little benefit.

I don’t know how to fix that, and I doubt anyone can even see the whole picture. I am reminded of an old thought.

“Nobody made a greater mistake than he who did nothing because he could only do a little.”

Edmund Burke

The bits to take away

Talk to restaurant owners and see what costs they have that provide little value. Think about your own situation. How much are your municipal taxes? Peterborough is a city of about 85,000 people and the city’s budget is nearly $300 million. About $3,500 per person. A family of four is a $14,000 item. You might argue that municipal taxes don’t pay the whole tab for the city. There is money from the province and the federal government. Businesses pay a big share too. The truth is people pay the bills. Governments have no money. They get it from you. Businesses pay no tax, they just handle the money. They include taxes in the price they charge you. You pay.

What can you do to help the government pay less for the things we need and avoid doing the things we don’t need. It should be easier in Canada than in some countries. The waste is easier to see. Elect people who understand frugal.

I build strategic, fact-based estate and income plans. The plans identify alternate ways to achieve spending and estate distribution goals. In the past, I have been a planner with a large insurance, employee benefits, and investment agency, a partner in a large international public accounting firm, CEO of a software startup, a partner in an energy management system importer, and briefly in the restaurant business. I have appeared on more than 100 television shows on financial planning. I have presented to organizations as varied as the Canadian Bar Association, The Ontario Institute of Chartered Accountants, The Ontario Ministry of Agriculture and Food, and Banks – from CIBC to the Federal Business Development Bank.

Be in touch at 705-927-4770 or by email at don.shaughnessy@gmail.com.

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