Tuesday, March 2, 2010

Comparing apples and oranges

Comparing salaries across national borders is a tricky thing to do. I was reminded of this problem while reading a post from Female Science Professor. My experience has been limited to the US and Canada but, even there, it's hard to really contrast these places. When I worked in Montreal, I had easy access to fast public transit, most things in walking distance, inexpensive housing but a much lower salary. In Seattle I have reluctantly concluded that, given my work location, a car was essential.

So how do you compare salaries?

This is actually a general problem in Epidemiology. Socio-economic status is known to be an important predictor of health. But it is tricky to measure. Salary needs to be adjusted for cost of living; hard even when you have good location information (which, in de-identified data you may very well not). Even in large urban areas, costs can be variable depending on location.

Alternatively, there are non-financial rewards (that are status boosting) in many jobs; how do you weight these? Adam Smith noted back in the Wealth of Nations that the a prestigious position was related to lower wages. How do you compare equal salaries between a store clerk and a journalist?

Is a hard problem and I really lack a great solution. But it's worth putting some real thought into!!


  1. Big Mac index is one attempt. I have heard that in Africa due to the lack of the golden arches they have used the Castle Index based on the famous South African beer.

  2. The Big Mac index is an interesting idea between countries. But most of the time I end up with the problem comparing two different regions in the United States. :-(

  3. Sorry. Yeah, within countries you're still screwed.

    Median house and apartment prices can sometimes be a guide? But with the extreme wealth disparities in the USA that's hardly ideal either. The difference between rich people moving to county Colorado versus those there all along or Martha's Vineyard...

    New Zealand has a pretty useful index called the NZDep that measures socioeconomic deprivation in ca. 90 person mesh-blocks.