The real value of a starting salary is how much you can buy with it.
In the graph above, if you were living in Tennessee and were offered a 25% raise to move to New York, you could use this map to see that the hidden-cost of living in New York is about 28% higher.
When making decisions consider:
- All the costs and benefits that vary with the consequences of the decision (lest you commit the hidden-cost fallacy);
- But only costs and benefits that vary with the consequence of the decision (lest you commit the fixed- or sunk-cost fallacy).