Housing might very well be 2-3x (or more) expensive, but not all goods have gone up 2-3x more. This allows for an adjustment of your consumption bundle; your housing is not going to be as large, but you might have access to a greater amount of other goods. Of course, you can choose to easily make it 2-3x more expensive if you desire. Family makes this difficult because your personal indifference curve places higher utility towards space, but the parent was discussing intern salaries, who generally don't have to support families.
You have the same access to goods almost anywhere in the US. The basic problem is that certain basic needs (energy, housing, child care) cost 2-3X more in the Bay Area than the Midwest. The only things that isn't the case for are food and transportation, which are slightly more expensive, but not as nearly as much. Transportation may be slightly cheaper out here, but not by a significant margin.
Your idea of a consumption bundle is appealing, but not very practical... you are assuming that there are things that can be adjusted, but for many, that just isn't the case. If you don't have a family, you might be able to get away with living in a smaller place. But if you do have one, for any given standard of living, there is a certain minimum size that you need. And the increase in costs in housing severely limit the flexibility that you might have in other areas.
I was mainly replying to your assertion that it isn't 2-3X more expensive to live in the Bay Area than the Midwest. I'm sorry to tell you that it is.
The idea of a consumption bundle is a microeconomic theory that has a lot of evidence behind it and is generally accepted in the community. It's not really my idea.
There is no certain minimum size that you need; you simply place a lot of utility of living space as opposed to other goods up to a certain point, at which diminishing returns kick in. The amount of utility you place clearly increases as you have more family members to take care of. In the case of an intern, this is generally not an issue.
There are also other purchases besides food and transportation that do not increase; the cost of travel and vacationing, for instance. Technology generally remains the same cost throughout the US. Clothing, I'd imagine, doesn't increase too much.
> I was mainly replying to your assertion that it isn't 2-3X more expensive to live in the Bay Area than the Midwest. I'm sorry to tell you that it is.
It can be. It depends on the utility you place on sq ft as opposed to all other goods. However, it is not an axiom that one needs 3x the money to live in the Bay in order to remain at the same indifference curve level as they previously did in the Midwest.
