Question

Topic: Research/Metrics

Comparing Incomes Of Different Countries

Posted by Anonymous on 11/27/2011 at 2:45 PM ET 275 Points
I want to compare salaries of the UK with that of India. How do I weight the data so that incomes in UK are comparable with that of India.
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RESPONSES

  • Posted by Dawson on 11/27/2011 at 3:21 PM Accepted
    Purchasing Power Parity would be one way - select a bucket of goods and look at domestic price etc. However it''s very easy to get wrong and could be very misleading. Hence the Economist''s Big Mac Index piece which I guess was a light hearted way of trying to address just this question.
  • Posted by koen.h.pauwels on 11/27/2011 at 3:30 PM Member
    i do not see the issue of comparability - GDP per capita is widely used, and PPP indeed adjust for what you can buy with that money.

    Can you please clarify the question?

    Thanks
  • Posted on 11/27/2011 at 3:38 PM Author
    I don't have an economics background, could you give me a practical how to, on using PPP for the comparison.

    Which other alternatives for comparing income levels are available?

    The main research question is "What is your annual income before taxes"?

    This question forms part of a set of questions which seeks to compare the socioeconomic state of young university graduates in the UK and India.

    The research is being conducted in both countries, and we would like to compare the income levels equitably.
  • Posted by Chris Blackman on 11/27/2011 at 4:14 PM Member
    You asked: "I don't have an economics background, could you give me a practical how to, on using PPP for the comparison."

    PPP means comparing, for example, how long a person has to work in the two economies being compared, to earn say, the price (in that respective market) of a loaf of bread, a kilo of rice, or a more complex basket of goods.

    See https://en.wikipedia.org/wiki/Big_Mac_Index for an explanation of the Big Mac Index.
  • Posted on 12/2/2011 at 12:58 PM Author
    Thank you all for your responses. Helpful and really appreciate it.
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