Purchasing Power Parity (PPP)
Definition
An economic theory and conversion factor that adjusts GDP and income comparisons between countries to account for differences in the cost of goods and services. A dollar buys more in India than in Switzerland; PPP adjustments account for this.
Why It Matters
PPP-adjusted figures give a more accurate picture of living standards than raw dollar comparisons. Without PPP, countries with low costs of living appear poorer than they actually are in terms of what residents can afford.
How It's Measured
The World Bank's International Comparison Program collects prices for hundreds of goods and services across countries to calculate PPP conversion factors.
Related Terms
Frequently Asked Questions
An economic theory and conversion factor that adjusts GDP and income comparisons between countries to account for differences in the cost of goods and services. A dollar buys more in India than in Switzerland; PPP adjustments account for this.
PPP-adjusted figures give a more accurate picture of living standards than raw dollar comparisons. Without PPP, countries with low costs of living appear poorer than they actually are in terms of what residents can afford.
The World Bank's International Comparison Program collects prices for hundreds of goods and services across countries to calculate PPP conversion factors.
this entity is one of the U.S. population demographics concepts that recurs across this site. The definition above is the technical answer; the paragraphs below add the practical context for how the concept connects to the the U.S. Census Bureau ACS and decennial files data behind every per-entity page on the site.
In the the U.S. Census Bureau ACS and decennial files data, this concept shapes one or more of the fields that drive the per-entity grades and rankings on this site. The methodology page describes which fields feed into which output; this glossary entry documents the underlying term.
Source: U.S. Census Bureau ACS, 2026.