Defined Term
Purchasing Power Parity (PPP)
Definition
A method to compare real incomes across countries by adjusting for local prices.
Purchasing power parity adjusts income figures to reflect what they can actually buy locally. A salary of €50,000 in Lisbon and €50,000 in Zurich sound identical but afford vastly different lifestyles — Switzerland's cost of living is roughly 90% higher.
PPP-adjusted comparisons reveal true material living standards independent of nominal income figures. WorthOf's PPP index is calculated as (net monthly ÷ local COL index) × 100, with New York = 100 as baseline.
A score of 68 means you can afford 68% of the New York lifestyle at that salary in that city.
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