What is included?

AIRINC’s total market basket consists of over 320 goods and services that are representative of purchases made by expatriates of diverse national origin while they are on assignments to international locations throughout the world. These items cover a broad range of consumer expenditures, from grocery store items to car insurance to club memberships. They fairly represent the spending patterns, both at home and abroad, of this constantly changing group of international transferees.

As the diversity of home and host countries involved in transfers has grown, so has our total market basket. For client applications, appropriate selections from the total list are made for the respective home and host locations that are being compared. While clients rarely wish to intervene on the item selection process, it is an option that we offer.

How are items weighted?

Not all goods and services are consumed in equal quantities. Accordingly, the relative importance of each item is established by its weight in the overall market basket. For example, gasoline has a much higher weighting in the market basket than rice. Thus changes in gasoline prices will have a much larger impact on the overall market basket.

Our home country weightings for all items start with government data on home country nationals’ spending patterns. These weightings will vary, and they are dependent on the income level and family size of the “typical consumer”, as well as the country of origin. This source data comes from the Consumer Expenditure Surveys of government bodies such as the Bureau of Labor Statistics in the U.S., the Institut National de Statistique in Belgium, and Instituto Brasileiro de Geografia e Estatística in Brazil . These surveys detail how consumers typically allocate their income based on income and family size.

Because government studies occur infrequently, AIRINC has developed in-house techniques for adjusting these “spending distributions” for the effects of inflation. These adjustments are applied to all base data on an annual (or more frequent) basis. Over the years, they have proven to be an effective predictor of new statistical data when it has become available.

On the host side, AIRINC collects detailed information on the changes in living patterns and expenditures that expatriates make when on assignment. For example, in Jakarta it is common to have full-time, live-in domestic staff. This type of data is collected directly from the expatriate employees of our client firms, primarily through our Pattern of Living Questionnaires.

What are the procedures for updating the Market Basket Items?

Since the purchasing patterns of consumers constantly change and evolve, we mirror this phenomenon with our own market basket changes. Our market basket is reviewed annually and updated to account for changing consumer habits and for products that are new and/or of growing use. For example, over the past decade products such as CDs, DVDs, internet usage, laptop computers and family-oriented fitness clubs have been added. As well, many items that reflect the preferences of the growing group of Asian, Latin American, and Middle Eastern expatriates have been added.

This continuous updating of our market basket ensures that our basket is current at all times. We then ensure consistent price collection by using our full-time staff to collect the price data on-site.

How does AIRINC ensure consistency in results when updating the Market Basket?

When market basket items are changed, either to reflect newly priced goods or updated models, we make certain the results for clients are reasonable and defensible, both on a place-to-place cost relationship as well as on a time-to-time basis. The primary technique for achieving smooth transitions is to introduce all changes to the market basket over time. For example, we currently price both VCRs and DVD players. Eventually, VCR players will be dropped. However, since we want to avoid potential price discontinuities and since both items are still purchased, we simply increase slowly the DVD weighting at the expense of the VCR weighting. This process effectively mirrors what is happening to the "statistically average" consumer.

In addition to phasing in items over time, we have a series of checks to ensure that any new item is broadly consistent in price ratio with other items in its assigned category. If the new item has a substantially different home/host price index than other items in its category, and/or the dispersion of collected prices for the new item is much wider than other items, we will exclude the new item until we can verify it is representative of the entire category. For example, a wide dispersion of prices might be indicative that in pricing DVD players we had inadequately specified the player features so we were collecting prices ranging from low-end to high-end models. In that case, we would not include the DVD prices until we were confident we had properly specified which models to price. Since we rely on our own full-time surveying staff to collect data, we ensure consistent price collection for new items such as DVD players around the world.

Real World Application of Statistical Data

While the strict laws of math and statistics drive our cost-of-living data collection and analysis, AIRINC is keenly aware that our data eventually goes directly into expatriate paychecks. Accordingly, senior AIRINC client services staff carefully review all results prior to publication to clients. In this way, we can be sure the statistical process serves, rather than obscures, its real purpose; that fair and consistent measurements of international living costs are made for your expatriates. This allows your expatriates to properly focus, not on changes in their allowances, but on their jobs at hand.

Runzheimer and AIRINC Announce Groundbreaking Global Mobility Alliance

Runzheimer International Ltd. and Associates for International Research, Inc. (AIRINC) have announced a strategic alliance to provide an expanded suite of global mobility services to the domestic relocation and international assignment industries. The combined products and services of Runzheimer and AIRINC will meet the needs of organizations with employees on extended business travel, on short and long-term assignments, and on permanent relocation both domestically and internationally.

Under the terms of the relationship, Runzheimer will produce products and services for companies with domestic relocation and compensation needs, while AIRINC will produce products and services for companies with international compensation and assignment needs. Both companies will market each other’s products and services.
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