Depending on where you live, you may have to pay more for housing, food, transportation, etc. This is known as cost of living. Well-off areas tend to have higher costs of living, while poorer areas tend to have lower costs of living. This is measured by comparing the prices of a basket of goods and services between areas. I have previously written about cost of living around the world, but here I will focus on how cost of living varies by state in the U.S. This data comes from World Population Review.
How Does Cost of Living Vary by State?
As you can see from the map, most of the U.S. has a similar cost of living, particularly in the center of the country. 29 states (58%) are within 10% of the average (100), represented by light green on the map. Some have slightly lower costs of living, shown in dark green, and a few have higher costs of living, shown in yellow, orange, or red. States with lower costs of living tend to be in the South, while those with higher costs of living tend to be in the Northeast or on the West Coast.
The state with the highest cost of living by far is Hawaii (dark red), where the cost index is almost double the U.S. average. It is followed by New York and California (red), where the cost of living is about 40-50% above average. These are followed by Massachusetts, Oregon, Alaska, Maryland, and Connecticut (orange), which have costs of living 20-35% above average.
The state with the lowest cost of living is Mississippi (dark green), which has a cost index almost 20% below average. It is followed closely by Kansas, Alabama, and Oklahoma. In fact, many states have a similarly low cost of living, as you can see in the histogram below:
As you can see, most states are clustered towards the left side of the histogram. 17 states have a cost of living between 16.7% and 6.7% below average. 16 states have a cost of living between 6.7% below average and 3.3% above average. Together, these represent the majority of states. The next largest bucket consists of the 10 states with a cost of living between 3.3% and 23.3% above average. Only 7 have a higher cost of living, including 6 that top out at 48.2% above average and then a big gap before Hawaii at 93.3% above average.
What Does This Mean?
Essentially, this means that most people in the U.S. can move between states without incurring significantly higher expenses, unless they are moving from the center of the country to the Northeast, West Coast, Alaska, or Hawaii. On the other hand, moving from a high cost of living area to the center of the country would result in significantly lower expenses. However, keep in mind that lower cost of living areas also tend to have lower incomes and vice versa, although this is not always the case.
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