The cost-of-living differential is a percentage index that quantifies the difference in prices and exchange rates between the expatriate’s country of origin and the destination country. These indices are essential in determining the corresponding allowance (please see “Cost of Living Allowance” for further details) required to maintain equal purchasing power for the expatriate in the host country, especially in situations where the cost of living (in the host country) is higher.

The ECA methodology provides three indices for each location, based on the consumption basket/model and the characteristics of the international allocation:

  1. Standard, Home-Based
  2. Cost-effective
  3. Cost-effective International.

The cost-of-living differential is a percentage index that quantifies the difference in prices and exchange rates between the expatriate’s country of origin and the destination country. These indices are essential in determining the corresponding allowance (please see “Cost of Living Allowance” for further details) required to maintain equal purchasing power for the expatriate in the host country, especially in situations where the cost of living (in the host country) is higher.

The ECA methodology provides three indices for each location, based on the consumption basket/model and the characteristics of the international allocation:

  1. Standard, Home-Based
  2. Cost-effective
  3. Cost-effective International.