Friday, January 30, 2015
Common sense says that a dollar goes further in Manhattan, KS, than in Manhattan. This chart from the Tax Foundation attempts to give some rigor to that idea by using Bureau of Economic Analysis data on metro area price levels to show how far $100 can stretch in each county in the United States. There are a few different factors that drive prices. One is that very remote rural areas (see Maine, or even more so, Alaska) tend to have higher prices than rural areas that are more connected to the rest of the country. That reflects the logistical hassles of importing various goods. The other factor is that urban areas are systematically more expensive than rural ones. But there's also huge variation between urban areas. The Boston-Washington corridor and the California coastline are much pricier than the cities of the South and Midwest. That's overwhelmingly a question of housing costs. The size and geography of the big coastal cities has become unfriendly to further sprawl, while zoning restrictions in inner cities and central suburbs prevent new construction from keeping prices in check.