Is Pakistan the cheapest country in the world? Depends on how (and for whom) you’re calculating

Different sectors use different cost of living rankings to fulfill their objectives. How exactly are these rankings measured and what are their uses? Let’s find out!

Is Pakistan the cheapest country in the world? Finance minister Shaukat Tarin indicated that he thought it was when he tweeted a ranking published by Numbeo.com underlining Pakistan as the cheapest country in the world as of mid-year 2021. 

The ranking consisted of a total number of 139 countries, from most expensive to least – based on a diverse range of indices, from which Pakistan was highlighted as the last. This is not the first time Pakistan has ranked at the bottom of the list – in fact, it has been there since 2018 according to the very same website. 

Pakistani government officials have broadcasted this piece of information a number of times in the last couple of years and from different databases around the world which employ user-generated information to measure the cost of living globally. 

And considering that this is a very particular sticking point, it is worth looking at just how these indices are calculated and the prices that they are based on. For starters, most of these indices are not meant to be calculated as economic indicators. In fact, the purpose of these calculations is corporate – meaning the objective of the rankings is to help large multinational entities decide remuneration packages for their employees rather than portray the image of a country’s cost of living or the general price level.

There is no public sector use for these rankings. Most of the indices used to create such rankings are more focused towards corporate use rather than the public sector. These rankings look at prices and the ‘cost of living’ from a very  middle and upper-middle class perspective, and do not depict an accurate image of the fiscal lives of the working class population.

 

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Saad Tanvir
Saad Tanvir
The author is a staff member and can be reached at [email protected]

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