Prices vary: A quick cost of living exercise

It's common to think about cost of living when thinking about moving to a new city. One way to measure cost of living is through regional price parities (RPP), which are price levels for a region expressed as a percentage of the overall price level for the nation. An RPP of 100 is equal to the national average.

In 2022, Missouri had an RPP of 91.119, indicating a cheaper cost of living than the national average. California's RPP of 112.47, on the other hand, indicates a higher-than-average cost of living. Check your state's score with this FRED map.

For a closer look, we can break down RPP into smaller components: Our first FRED map (above) shows the RPP for goods, and our second FRED map (below) shows the RPP for housing. As these two maps show, the differences in costs of living across the nation vary by component: There's significantly less variation across states for goods than there is for housing.

One reason for this could be the differences in mobility for goods and housing. Goods are clearly easier to trade and ship around the country, which minimizes the differences in the cost of goods across states. But it's difficult to move a house to a new location, and the location itself greatly affects the price. There are also many reasons people don't choose to move to exploit lower housing prices elsewhere, which limits the ability for markets to equalize housing prices across states.

How these maps were created: First map: Search FRED for and select "Regional Price Parities: Goods for Missouri" (series: MORPPGOOD). In the right-hand corner, click the green "View Map" button then the red "Edit Map" button. Select 5 for the number of color groups and "User Defined Method" in the "Data grouped by:" dropdown menu. Change the bins to 69, 79, 97, 121, and 177. Click "Apply Intervals." For Second map: Search FRED for "and select Regional Price Parities: Services: Housing for Missouri" (series: MORPPSERVERENT). Click "View Map" and "Edit Map" and again select 5 for the number of color groups. Select "Fractile Method" in the "Data grouped by:" dropdown menu.

Suggested by Maximiliano Dvorkin and Cassie Marks.