Yesterday, the big news was that Oslo, Norway surpassed Tokyo, Japan as the world’s most expensive city in the world. The rankings, prepared by the Economic Intelligence Unit, take into account different metrics in calculating the cost of living for each city using New York as the baseline (100%). Simple enough, right? Oslo, with an index score of 140 is purportedly 40 percent more expensive than New York. However, I am going to have to call bullshit on the EIU list.

Why? In the rankings, Los Angeles was ranked 35th and San Francisco was ranked 40th! I grew up in Los Angeles, I have friends there, and I now live in San Francisco. I can tell you that there is no way that Los Angeles is more expensive than San Francisco. Every cost of living calculator I’ve found on the Internet puts Los Angeles at 12%-52% cheaper than San Francisco. Housing being the biggest factor in the difference in prices.

I for one would be able to sell my 1-bedroom/1.5-bath loft condo in the city and buy a 3-bedroom/2-bath house in or very near to Belmont Shore, a very nice area of Long Beach, CA (Los Angeles County). All things being equal, I would say the cost of living is cheaper there. I mean, assuming we moved to a place the same size as we live now and other factors. My commute would most certainly increase, but that’s life in Los Angeles.

Essentially, all of the cost of living indexes are skewed in one way or another due to the differences among the socio-economic classes. For example, for people making $50k per year that rent the difference in cost of living between cities may be substantially different than for those that make $150k per year and own. The rental markets in Los Angeles and San Francisco are relatively equal, but the median home price in San Francisco county is much higher than in most areas of Los Angeles county.

It’s complicated, but the bottom line is that people I know that have lived in Los Angeles, San Francisco, and New York, have all stated that San Francisco’s cost of living is closer to that of New York than that of Los Angeles. There’s no way L.A. is more expensive. Which reminds me, big ups to my friend Brandon Jansen who is moving to Tokyo, Japan tomorrow to work for one of the other Big 4. Good luck, I hear it’s expensive there.

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