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Comment by zaptheimpaler | Hacker News Reader

It doesn't make sense to compare salaries between US & India on a US$ perspective. Indian salaries are lower in terms of USD, but the cost of living is also lower - basically the 5$ USD meal at McDonalds in US costs maybe 1$ USD in India. If you are paid "less", but everyone else is paid "less" too, then goods/services are cheaper - so the actual goods/services you can purchase will be the same for a much lower salary in India. Lookup purchasing power parity.

It might be more sensible to compare how much more dentists make than the average income. i.e Average dentists salary / average salary.

For US I get - 175350/55775 ~ 3x

For India its 8.5x

So dentists are probably pretty well paid in terms of the standard of living they can purchase.

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It does make sense to compare them on a USD basis if you trying to figure out what causes a 10x difference in x-ray cost between the U.S. and India (in USD)

Unfortunately, no. Purchasing power differs across economies. While exchange rate correlates with purchasing power, it's merely a rough measurement, not something you'd base analysis on.

Read up on purchasing power. Purchasing power is what your money can buy, which is the more correct measure.

Its the same reason it doesn't make sense to directly compare programmers salaries in San Francisco vs. Pittsburgh. If (made up numbers) 120K$ in SF buys the same lifestyle as 90K$ in Pittsburgh, it means someone making 120K in SF is roughly as wealthy as someone making 90K in Pittsburgh. Certainly saying that the SF programmers make 1.3x more is true, but the more fundamental question is the lifestyle that the income affords you.

Kinda-sorta. With a higher salary, living a below-average lifestyle for the area can lead to staggering savings rates and savings in absolute terms. For instance, saving even 23% of 120k is better than saving 30% of 90k.

And of course a lot of things cost the same regardless of where you live. Manufactured goods cost pretty much the same in India as in the US and sometimes more, because of import duties. Gasoline is significantly more expensive.

Right.. now going back to the India/US comparison, its pretty fair to say 99% of people in India will not immigrate to the US. So the hypothetical value of saving lots of money in the US to spend in India doesn't really apply. The SF/NYC analogy does not hold exactly to US/India.

Who said anything about saving in the US to spend in India? Saving in the Bay Area to spend in rural Montana is an equally valid comparison, cost-of-living wise.

The point I was making is that some things cost the same no matter where you live. The Indian dentist who wants to take a foreign vacation, buy an iPhone, or a car needs to spend more, relative to her income, than the American dentist. Purchasing power only holds for things that are labor-bound (mainly services, and goods that are labor-intensive to manufacture) rather than resource-bound.

Purchasing power is based on a basket of goods for the average consumer. It takes into account expenses like phones and cars - as you say, iPhones are still expensive but the basket would take that into account and purchasing power would be lowered accordingly.

The average proportion still doesn't make sense. Because the large population depresses the national average income greatly. On the other hand if you are comparing spending power I feel it should be more accurate to include GDP Per Capita (Purchasing Power Parity) in your calculations.

US GDP per capita nominal = 57.5K USD, US GDP per capita PPP = 46K USD. This gives a PPP-to-GDP ratio of 0.8. The average dentist salary is 175,350 USD (nominal). So the US average dentist salary (PPP) is 140,280. This finally gives you a dentistSalary-to-nationalAvg (PPP) of 3.

Now, I'll do these same calculations for India. GDP per capita (nominal) is 1.7K USD and in PPP terms it is 6.1K. This leads to a PPP-to-GDP ratio of 3.6. In India the average dentist salary is 312,797 INR according to payscale. This is equivalent to 4750 USD (nominal). In PPP terms, this is equivalent to annual salary of 17.1K USD (PPP). So finally we have a dentistSalary-to-nationalAvg ratio of 2.8 for India.

So our metric is 3.0 for the US vs 2.8 for India.

Most statistics were obtained from Tradingeconomics.com which also appeared on top of google searches. I may also have screwed up my calculations somewhere, but I don't know.

A Big Mac in India costs $2.76 USD vs $5 in US. See the Big Mac Index [1]

1. http://www.economist.com/content/big-mac-index

At least when I used to live in India 6 years ago, A Big mac was a 'fancy' meal rather than the cheapest meal possible. I don't think the index applies.

Bigmac is not the cheapest meal. A double cheeseburger is about 1/3 the price.

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