Consumers: The highest purchasing power lives away from expensive cities

How wealthy or poor you are depends not only on your income, the regional cost of living also plays a role.

Consumers: The highest purchasing power lives away from expensive cities

How wealthy or poor you are depends not only on your income, the regional cost of living also plays a role. If you adjust the income rankings in the 400 German districts, districts and cities, the large cities sometimes fall drastically, as calculations by the German Economic Institute (IW) on price-adjusted disposable income per capita, which the German Press Agency shows in advance templates.

The new ranking mixes things up a lot: often it goes up or down by significantly more than 100 places, twice even by more than 250.

The wealthiest

At the very top: rich stays rich. According to IW calculations, the highest available annual income in regional prices can be found in the Bavarian district of Starnberg at around 32,800 euros. That is 34.7 percent more than the national average. Starnberg is already number one in terms of nominal income and the lead is simply so large that it is not offset by the high cost of living, which is 14.1 percent above the national average.

The next four places are also occupied by cities, districts or rural districts that are already well ahead in terms of nominal income: the Hochtaunuskreis 27.1 percent above the national average, Baden-Baden with 26.5 and the districts of Miesbach and Munich with 19.8 and 18.6 percent above average price-adjusted income.

The poorest

Even at the bottom, poor remains poor: the IW experts calculate the lowest price-adjusted available annual income for Gelsenkirchen. At 18,886 euros, it is 22.5 percent below the national average. The city already had the Red Lantern before the price adjustment. The 5.1 percent below-average costs there don't change anything. This is followed by Offenbach am Main, Duisburg, Herne and Freiburg, which are 21.7 to 16.2 percent below the national average.

The role of the cost of living

At the end points of Starnberg and Gelsenkirchen, the regional cost of living may not change the unweighted income ranking, but in between they throw things into disarray. However, this is also due to the fact that the differences are sometimes relatively small, especially in the middle field.

Overall, the regional costs level out the income differences to some extent. “The spread is getting smaller,” says Christoph Schröder from the IW. The differences between East and West also decreased.

The relegated ones

In view of their high cost of living, the large cities sometimes drop more than 200 places: Stuttgart has 259 places: rank 301 instead of 42. Frankfurt am Main goes from 118th place to 370th and Hamburg falls from 64th to 297th . Rank. Cologne also lost a lot: 183 places from the upper midfield to 349th place.

Of the group of seven largest cities, only Munich and Düsseldorf can remain in the richer half after price adjustments. Thanks to only 8.5 percent above-average costs, Düsseldorf only falls from 19th place to 103rd. In Munich, the outstandingly high nominal income in second place dampens the fall despite having the highest costs nationwide. With 24th place in price-adjusted income, the Bavarian capital remains at least in the top group.

But there are also smaller cities and districts that fall many places down due to high costs. These include Heidelberg, Ingolstadt and the Freising district. And Freiburg's high cost of living puts it almost all the way down: 396th place instead of 270th.

The climbers

The biggest climbers in terms of the number of ranks climbed are all districts. Above all, Tirschenreuth, which gained 140 places thanks to low prices and jumped from 200th to 60th place. The Vulkaneifel district improved by 139 places, Cochem-Zell by 135 and the Hof and Regen districts by 133 and 132 respectively. You won't find any large cities in this group. Even in rural areas, people often have a good income, says Schröder. The Olpe district in North Rhine-Westphalia, for example, is in 25th place in terms of nominal income. Together with the cost of living below the average, that's enough for ninth place in real income.

The basics of ranking

The ranking is based on data on nominal income from the Federal Statistical Office as of 2021, which the IW recently published together with the Federal Institute for Building, Urban and Spatial Research (BBSR) in an index of the regional cost of living at district and district level and cities combined. The price index is based, among other things, on 24 million price data collected, some of which were automated, in 2022. Housing costs were the deciding factor for larger differences.

The ranking does not take into account differences in the expenditure structure, for example, city dwellers may have lower commuting costs than people from cheaper rural areas.

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