<p>I think your intuition is right that food is cheap there. The Economist Big Mac price index suggests that <a href="http://www.economist.com/content/big-mac-index/" rel="nofollow noreferrer">India has some of the cheapest big macs in the world</a>. More generally, the index indicates that there is a strong relationship between GDP per capita (a proxy for labor costs) and Big Mac prices:
<img src="https://i.sstatic.net/vIMpM.png" alt="Big MaC index April 2015"></p>

<p>Labor is a significant part of the costs of making food (<a href="http://smallbusiness.chron.com/common-food-labor-cost-percentages-14700.html" rel="nofollow noreferrer">25-35 percent in America</a>). Transportation is a significant part of the cost of food grown far away (<a href="http://data.worldbank.org/indicator/IC.EXP.COST.CD" rel="nofollow noreferrer">world bank data indicates that even exports fees alone can be substantial</a>). 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.   </p>

CC BY-SA 3.0
2015-04-02T12:33:11.403Z
Big Macs with beef?
Deer Hunter
CC BY-SA 3.0
2015-04-02T14:40:01.003Z
I'm not sure how they deal with quality and compositional issues of the big-mac across countries.
BKay
CC BY-SA 3.0
2015-04-01T21:22:06.380Z
2015-04-02T14:42:02.193Z
2015-04-02T14:42:02.193Z
BKay
<p>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? </p>

CC BY-SA 3.0
2015-04-01T21:09:16.513Z
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".
Alecos Papadopoulos
CC BY-SA 3.0
2015-04-01T21:12:09.783Z
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.
user1689987
CC BY-SA 3.0
2015-04-01T23:07:42.350Z
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.
Lumi
<supply-and-demand><markets>
Why is food less expensive in India than the United States?
user1689987
# Why is food less expensive in India than the United States?

(Asked by: username_0 on 2015-04-01)

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?

**Tags:** supply-and-demand, markets

> **Comments:**
> **username_1**: 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".  
> **username_0**: 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.  
> **username_2**: 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.  

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## 1 answers

### Answer by username_3 on 2015-04-01. Score: 4 | Accepted answer

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](http://www.economist.com/content/big-mac-index/). 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](https://i.sstatic.net/vIMpM.png)

Labor is a significant part of the costs of making food ([25-35 percent in America](http://smallbusiness.chron.com/common-food-labor-cost-percentages-14700.html)). 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](http://data.worldbank.org/indicator/IC.EXP.COST.CD)). 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.

> **Comments:**
> **username_4**: Big Macs with beef?  
> **username_3**: I'm not sure how they deal with quality and compositional issues of the big-mac across countries.  

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