These are the 10 Most Expensive Cities in the World

Who’s ready for another top 10 list? C’mon, you know they’re fun.

Last time around, The Blaze discussed the top 10 “economically confident” states in the U.S. (and, yes, we are well aware the District of Columbia is not a state). So, let’s shake things up but keep it in that same vein. Let’s take a look at the top 10 “most expensive cities” in the world.

A new report from the Worldwide Cost of Living Survey compares the price of hundreds of products and services, including food, rent, luxury items, and transportation, in 131 cities. The prices are then indexed to New York City, which has a score of 100. Zurich, for example, beats Tokyo by a score of 170 to 166, which means that the cost of living in those cities is 70 percent and 66 percent more expensive than living in NYC, as measured in U.S. dollars.

By using this method, and by using NYC as a measuring stick, the survey derives the most expensive metro areas in the world. Unsurprisingly (depending on your view of the U.S. economy), no American cities made the top 10. Maybe this is due to the fact that the Cost of Living Survey doesn't factor in real estate prices.

“Looking deeper down the list, some surprises emerge,” writes Derek Thompson of The Atlantic. “New York City fell below Los Angeles into a tie with Chicago. Globetrotters might be surprised to learn that Cleveland finished just above Rio. The three cities at the bottom of the list were Karachi, Pakistan, Mumbai, and Tehran, all of which finished around 50, suggesting that they are half as expensive as New York City.”

And although this list (like most top 10 lists) is fun in its own way, Thompson raises an excellent question: What makes a city expensive, anyway?

It’s tempting to shrug it off and reason that prices are simply higher in wealthier countries. But Thompson believes it’s much more than that.

“It begins with trade,” he writes. “You can think of an economy as making two kinds of stuff. There's the stuff you can put in boxes and trade, like auto parts, and the stuff you can't put in boxes or trade, like hair cuts. If a country gets good at making stuff it can trade for money, it becomes richer. As export income and investment flows in, incomes rise, wages rise, and prices rise across the board. Even the prices for the (utterly non-boxable) haircuts.”

This theory, which he notes is a simplified version of the Balassa-Samuelson effect, partly accounts for dramatic price differences between cities; but it still doesn't explain the entire story.

“Restrictive urban policy raises the price of rent in similarly productive cities. Energy taxes raise the price of gas. Tariffs raise the price of imports,” Thompson notes.

He continues:

In Switzerland, rising prices over the last few years have little to do with gas prices, or new zoning law, or the rising productivity of Zurich's workers (not to impeach the industrious Swiss!). Instead, they have much more to do with Greece and Germany. The debt crisis sweeping Europe has created a flight to safety for investors. Swiss Francs are considered safer, and the rising Franc has pushed up prices. Japan and Australia have also seen strong currency appreciation over the last few years, which made it relatively expensive for foreigners.

In cheaper cities throughout the developing world, especially in Asia and the Middle East, governments have used price controls to restrain the appreciation of their currency. This strategy keeps auto parts cheap, which makes the West buy more of them. But it also keeps hair cuts cheap, which means barbers have weaker income.

Therefore, if Zurich is indeed the “most expensive city,” this doesn’t mean that it is the most expensive in everything. For example, while Moscow has much cheaper bread and gas than, say, Hong Kong, its hotel rates are still among the priciest in the world.

The reasons for these price differences are so numerous and varied – and subject to unexpected changes – that to explain and/or catalog them all, as Thompson puts writes, it “would probably require a very long book."

Unfortunately, we only have about 700 words. In the meantime, enjoy this list of the "most expensive" cities in the world:

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