How levels are worked out
How we place a household in Comfortable, Refined, Exclusive or World-class luxury, and why a level is local.
The four levels
Each level means living like a share of the people in that country: Comfortable like the top 20 percent, or 1 in 5 households; Refined the top 10 percent, or 1 in 10; Exclusive the top 5 percent, or 1 in 20; and World-class luxury the top 1 percent, or 1 in 100. We always list them in that order.
Levels are local
The same money can buy a higher level in one country and a lower one in another, because each level is set by the people of that country. A household at the 1 in 10 level in Andorra spends a different amount from one at the 1 in 10 level in Greece, since prices, rents and incomes differ. On the “How much money will I need for my lifestyle?” map the colors never change with the level; only the amounts in the key do.
How a level is worked out
- We start with household surveys from the World Bank. They show what the people in each country spend or earn at the 80th, 90th, 95th and 99th percentile. Those are the Comfortable, Refined, Exclusive and World-class luxury levels.
- Surveys miss the top of the income range, so we check each figure against tax-record income data from the World Inequality Database and against published guides for retirees from abroad. The final figure is never lower than the survey.
- We move each figure to today's prices.
- We scale it for your household. More people cost more, but not in a straight line: the number of people to the power of 0.7. A couple costs about 1.6 times one person. Five people cost about 3.1 times.
- The result is the monthly spending, in local money and in US dollars, that “Which of the four lifestyles is mine?” compares you with. It includes rent, because the plan assumes you rent your home.
Places with no household survey
For places with no household survey, such as many small islands, we start from prices in cost-of-living sources and retiree guides, and build the higher levels from the typical gaps between levels in countries that have surveys. These places show fewer stars (see Stars and confidence). In a few countries, local spending is below what a foreign household lives on. There, the lower levels follow the retiree guides instead of local households.
How a neighborhood gets a level
We recommend only real neighborhoods where people already live. For Comfortable and Refined, a neighborhood is judged by long-term rents. Multimillion-dollar homes are not rented, so for Exclusive and World-class luxury we judge by what owner-occupied homes sell for, with rents as a cross-check. A level that has no real neighborhood in a city is not offered there, and a country offers only the levels that at least one of its cities supports.
Questions
What does "1 in 20" mean here?
Each level is named for the share of people in that country who live at or above it. Exclusive is the top 5 percent, or 1 in 20: about one household in twenty spends that much or more. The levels describe your standing among the people of one country.
Is this about income or spending?
Spending. We ask what your household spends in a typical month, rent included, after tax, in today's prices: housing, food, transport, health insurance, going out and travel. That is the number the levels are set in, so the comparison is direct. Tax rules differ so much between countries that a take-home income would give a less exact answer.
Why is Refined not the same amount everywhere?
Because each level comes from the people of its own country. The same level costs a different amount in each country, which is why Compare shows all four levels for two countries side by side.
My spending is much higher or lower than the scale. What then?
If you are below Comfortable, the page says so and shows how far you are from it. If you are above World-class luxury, it says you are at or above the top 1 percent, or 1 in 100. Past those edges we do not guess a percentage.
The full method is on How it works.