Quote:
Originally Posted by left of center
How is GDP per capita higher in places like Cincinnati or Cleveland? Those cities have had it much rougher than Chicago as the rust belt declined over the last 50 years.
|
Because, as I mentioned in my post, it's adjusted using RPPs (Regional Price Parities), which is a ratio that represents the price of all goods for a particular geography versus the national average. So a higher RPP for something like rent means the rent is high in that area that you're looking at. 100 is the baseline - Chicago MSA is at 114.8 meaning the rent in the Chicago MSA is 14.8% higher than the national average for 2016. NYC area is 154.9, meaning the rent in the NYC area is 54.9% higher than the national average. Just as examples - similar to CPI.
Cleveland's 2016 per capita personal income is $6653 below that of Chicago. However, their RPP basically indicates all goods in the MSA is almost 10% under the national average, whereas Chicago is nearly 4% over the national average. So then adjust using that and the numbers become a lot closer.
It is essentially adjusting for purchasing power of goods - or things like rent - in every area. Meaning that the personal income per capita in Chicago area basically almost goes as far as the per capita personal income in the NYC area.