Let's say I have a child with special needs, be it giftedness or disability. If I want to provide my child with decent care and quality of life in the SF Bay Area, a household income of $160k is going to make things very difficult. Not impossible, but certainly very hard, and likely harder than anywhere else in the country.

In this case my "spending habits," as you put them, might include expenses like routine hospital or clinical bills, specialist care, or some sort of domestic help. Double all of that if my child is physically as well as mentally disabled, or if my child exhibits some sort of prodigy that I want to nurture properly.

You have to remember that the price of goods and services in this local economy is largely driven by those earning some significant multiple of our hypothetical $160,000.