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India has 4x the population, less land, and far worse technology and infrastructure than the United States. Shouldn't food cost in the US be less expensive? I've never been to India, but it seems like food costs far less there from what I see on TV (10 cents a meal). Why is this?

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  • $\begingroup$ Did you happen to have a look also at the (nominal) wage levels in India compared to US? The real issue is "what money can buy". $\endgroup$ – Alecos Papadopoulos Apr 1 '15 at 21:09
  • $\begingroup$ I understand people get paid less there, but the cost of something shouldn't be determined by how much people get paid. For example, a paper clip doesn't cost $5 just because people can afford it. The cost should be determined by supply and demand, and the reasons I gave make me think the supply should be more and the demand less in the United States compared to India. $\endgroup$ – user1689987 Apr 1 '15 at 21:12
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    $\begingroup$ No, the supply of money also plays a part in determining the demand, through its operation on the price level. I can't - in a monetary economy - demand more than I can pay for. Relative to earning power, food is significantly less expensive in the US than in India. $\endgroup$ – Lumi Apr 1 '15 at 23:07
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I think your intuition is right that food is cheap there. The Economist Big Mac price index suggests that India has some of the cheapest big macs in the world. More generally, the index indicates that there is a strong relationship between GDP per capita (a proxy for labor costs) and Big Mac prices: Big MaC index April 2015

Labor is a significant part of the costs of making food (25-35 percent in America). Transportation is a significant part of the cost of food grown far away (world bank data indicates that even exports fees alone can be substantial). But when food is grown locally and prepared locally, the total costs are significantly determined by local labor costs. In addtion, Indian restaurants probably also serves much smaller portions than in rich countries, particularly the United States. They may also make use of less expensive ingredients generally, more stables and seasonal vegetables and less dairy and meat.

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  • $\begingroup$ Big Macs with beef? $\endgroup$ – Deer Hunter Apr 2 '15 at 12:33
  • $\begingroup$ I'm not sure how they deal with quality and compositional issues of the big-mac across countries. $\endgroup$ – BKay Apr 2 '15 at 14:40

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