The latest shiny object dangled by politicians is “affordability” — the ability of consumers to pay for the necessities for sustaining a “reasonable” lifestyle. To make the case, many point to the “cost of living” usually measured by an index, COL, which includes the cost of housing, food, utilities, education, transportation, energy, and taxes. COL by itself is an inadequate measure of the economic “pain” consumers experience because it does not account for the level of household income available to cope with living expenses. 

We propose a more meaningful measure — the “Relative Affordability Pain Index,” which accounts for both cost of living and household income. COL varies widely by state, as does household income. RAPI is computed on a state-by-state basis by dividing the relative cost of living — the ratio of state COL to national COL (103.4) — by the relative household income, the ratio of state household income to median national income ($81,604). RAPI for the United States is equal to one — values of RAPI greater than one indicate less relative ability to pay — more “pain” — while values less than one indicate more relative ability to pay — less “pain”.