How much does it cost to live in Andorra?

In this article we will address the question of How much does it cost to live in Andorra but from official data: using the report «I studied about the cost of living in Andorra» of 2018, the first study on the cost of living in the country prepared by the Andorran Government Statistics Department. It is a publication that includes up to four methodological approaches to determine annual essential income or monthly that must allow covering basic needs.

We use this study because there is no more recent one to study this question. In any case, if we add to these data the inflation in Andorra and the crazy price of housing, we can also draw some relevant conclusions in this sense. Just as they said in the Government, It is the first and the last published to date.

Thus, by 2024, the data will surely be more in the range of €1,600-€1,800.

Introduction

The study has been carried out in response to the request of the General Council of September 15, 2017 to determine what are the basic income necessary for a one-person household, as well as the corresponding multiplicative factors that allow calculating the adequate income for other types of households according to their composition, and thus establish a reference for the correct implementation of social policies. We will, however, use it to have an idea of how much it costs to live in Andorra.

The conclusion of the study, starting from the end, is that living in the Principality of Andorra costs, according to the four methods taken, adequate annual income for a one-person household of between € 12,700 and € 14,400, including rent. And on the other hand, for households with more people each additional person represents between 0.4 and 0.5 extra of that income, is younger or older than 13 years.

The different methodologies

The four methodological approaches by which we try to reach the basic income necessary to live in Andorra (decently) are:

1. The needs expressed by a sample of benefit recipients to make ends meet, compared to the Living Conditions Survey (ECV) of 2018 that reaches the entire population of Andorra.
2. With the Family Budget Survey (EPF) household expenses are analyzed to approximate the necessary income of single-person households and the factors to be multiplied for other types of households.
3. The cost of a food basket proposed by the Food and Agriculture Organization of the United Nations (FAO) and the cost of other goods is calculated with the proportions of expenditure obtained with the EPF.
4. It is determined the level of poverty in Andorra with the EPF data and an expenditure threshold is established to obtain the necessary income that covers the cost of living.

Obviously for the purposes of this article, which is to know how much it costs to live in Andorra, approach number 3, that of the food basket and the cost of other goods, is the most important and is the one that we will discuss. However, there are some points of the other methods that are also relevant to highlight in order to understand how much life costs in Andorra:

• One of the conclusions of the first approximate method, with CVD, is that one-person households in the general population would need between € 1,500 and € 1,800 to make ends meet, while those who receive social benefits indicate that they would need € 1,200, as a first approximation of how much life is worth in the country.
• Using the second methodology, it has been concluded that for a single-person medium-sized household and taking the case of rental housing (since it is the case of more than 60% of the inhabitants) it would be necessary €8,776-€8,876 per year to cover living expenses without counting rent, and €4,096-€5,100 to cover rental costs, considering that the annual life in Andorra costs €12,832-€13,976.
• With the poverty level method, and taking the 75% of the median income as the minimum income, not of risk of poverty but of social integration, it is concluded that living in Andorra is worth €12,802 of total annual expenditure.
• Highlights the difference in housing spending between tenants living on rent and homeowners. While one-person rental households in totala and on average allocate 33.6% of the annual budget to housing, property owners allocate 12.2%, leaving a much higher percentage of wages and therefore spending more, especially on goods they are not essential.

Consumer basket price in Andorra

As we mentioned earlier, Method 3 calculates the cost of a food basket proposed by FAO using the Andorra Consumer Price Index. Next we will show the cost of the basket in a table to get an approximate idea of the cost of the different products and products that make it up. In any case, the table prices are slightly undervalued, since in the report they use lower than average price values in order to calculate the minimum cost of living.

As can be seen in the table, the total calories collected through prices corresponds to 2,905, which means € 2,404.22 per year. The total daily calories corresponding to the average between France and Spain is 3,327.5 calories; therefore, 87.3% of calories is explained by CPI prices, but to obtain the cost in a more realistic way, it is scaled to the average between France and Spain up to 3,327.5 calories, resulting in € 2,754 per year.

On the other hand, from the Classification of Individual Consumption by Purposes (CCIF) there are data on total expenditure in percentages classified by consumption groups, so it is interpolated from the € 2,754 spending on «Food and beverages» to all spending groups to obtain the cost of living.

Where Q20-Q30 means the expense (in proportions) of the average income between the 20th and 30th decile, that is, the expense made by people who, classified by income level, are between 20 and 30% lower and Q25-median the expenditure made by people who, classified by income level, are between 25% and the median.

As we can see, a total of € 12,300-12,800 per year of cost of living for a single person home.

How much does it cost to live in Andorra?

From this report and with the objectives of the article in mind, we can draw several conclusions:

• First of all, that living in Andorra has a generally normal-low cost, except rent, which represents a large item in household budgets.
• Andorra is worth around €12,000-13,000 for living and leading an acceptable and adequate life for a single person.
• If several people live in the same home, each additional person only adds up to 0.4-0.5 of the amount prior to the total household expenditure, that is to say about € 6,000.
• Thus, for a two person household the cost of living is about € 18,000, for one of three it is € 24,000, for one of 4 it is € 30,000 and for a five person household it is about € 36,000.
• Considering you as a single person who shares a home, if you share a home with another person, living in Andorra is worth €9,000-10,000, somewhat lower from the initial €12,000-13,000. If you share the home with three or four people, Andorra costs €8,000-9,000 per person, stabilizing in that range.
• This is due to the price of renting a home does not vary much being 2, 3 or 4 bedrooms compared to being in a single room (one-person). Therefore, since rent is an important item in the budget if the home is shared the individual cost is reduced in a very relevant way.

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You can contact us and tell us your case here. You also should read the main advantages of the Principality of Andorra o read more of our articles here.