Why NRIs Sometimes Say “India Feels Expensive” and What That Really Means

When people in Kerala hear returning NRIs say that everyday expenses in India feel expensive, the reaction is often one of surprise. After all, the common assumption is that India is a lower-cost country compared to places like Europe or the Gulf. So how can the same prices feel expensive to someone who earns in a stronger currency?

The answer is not in the price itself. It is in how the human brain builds and updates its sense of what is “normal.”

“Expensive” is never absolute, it is always relative

Human beings do not evaluate money in a neutral or mathematical way. We compare everything to a reference point that the brain has learned over time.

Behavioural economist Richard Thaler described this clearly when he wrote:

“People evaluate outcomes as gains or losses relative to a reference point.”

This means that there is no fixed idea of what is expensive or cheap. There is only what feels normal compared to what you are used to.

For someone living in Kerala full-time, that reference point is built from daily exposure to local prices. For someone living abroad, it is built from an entirely different economic environment. When both people look at the same number, they are not actually seeing it through the same mental lens.

The brain does not switch reference points easily

A key concept in behavioural economics is reference dependence, first developed by Daniel Kahneman and Amos Tversky. It explains that people do not evaluate value in isolation. Instead, they evaluate it based on deviations from what they expect.

Kahneman and Tversky summarised this idea in prospect theory, where they showed that:

“Losses loom larger than gains.”

In simpler terms, the brain reacts more strongly to something that feels “different from expected” than to its actual value.

When someone returns from living abroad, their expectation system does not immediately reset. They still carry the mental structure of the place where they have been living. At the same time, they are physically present in a different economic environment. This creates a mismatch between expectation and reality.

That mismatch is often experienced as “this feels expensive,” even when the objective price may not be unusual within the local context.

Why the same price feels different to different people

Every person develops a mental model of what things should cost. This model is not fixed. It is shaped by income, environment, frequency of spending, and even the culture of consumption around them.

Over time, what becomes “normal” is not the actual price of things, but the pattern of spending that the brain repeatedly observes.

For someone living in India, that pattern is consistent and reinforced daily. For someone living abroad, a different pattern becomes normal. When these two patterns collide, the brain does not merge them smoothly. Instead, it compares them.

So the same expense can feel perfectly ordinary to one person and unusually high to another, even when both are financially rational. The difference is not in intelligence or awareness. It is in the reference system being used.

Why short visits make this feeling stronger

The perception of expense becomes even sharper during short visits because of how spending is experienced.

In everyday life, expenses are distributed across weeks and months. The brain gradually normalises them and stops paying attention to each individual transaction. Spending becomes part of routine background behaviour.

During a short visit, however, spending is compressed into a short time window. Each transaction becomes more visible. Instead of blending into a monthly rhythm, every purchase is experienced as a separate decision.

This increases what psychologists call salience, which is simply the degree of attention the brain gives to something. When salience increases, the same price feels more significant than it would in a routine setting.

Memory also plays a quiet role

Another important factor is that people often carry outdated mental snapshots of prices. If someone has not lived in India for a long time, their internal reference point may still be based on older price levels.

When they return, they are not only comparing with their foreign experience, but also with an older version of the local economy stored in memory. This creates an additional layer of mismatch.

So the perception of “expensive” is not only about current prices versus foreign prices. It is also about current prices versus remembered prices.

Why NRIs Sometimes Say “India Feels Expensive” — and What It Really Means

When people in Kerala hear returning NRIs say that everyday expenses in India feel expensive, the reaction is often one of surprise. After all, the common assumption is that India is a lower-cost country compared to places like Europe or the Gulf. So how can the same prices feel expensive to someone who earns in a stronger currency?

The answer is not in the price itself. It is in how the human brain builds and updates its sense of what is “normal.”

“Expensive” is never absolute, it is always relative

Human beings do not evaluate money in a neutral or mathematical way. We compare everything to a reference point that the brain has learned over time.

Behavioural economist Richard Thaler described this clearly when he wrote:

“People evaluate outcomes as gains or losses relative to a reference point.”

This means that there is no fixed idea of what is expensive or cheap. There is only what feels normal compared to what you are used to.

For someone living in Kerala full-time, that reference point is built from daily exposure to local prices. For someone living abroad, it is built from an entirely different economic environment. When both people look at the same number, they are not actually seeing it through the same mental lens.

The brain does not switch reference points easily

A key concept in behavioural economics is reference dependence, first developed by Daniel Kahneman and Amos Tversky. It explains that people do not evaluate value in isolation. Instead, they evaluate it based on deviations from what they expect.

Kahneman and Tversky summarised this idea in prospect theory, where they showed that:

“Losses loom larger than gains.”

In simpler terms, the brain reacts more strongly to something that feels “different from expected” than to its actual value.

When someone returns from living abroad, their expectation system does not immediately reset. They still carry the mental structure of the place where they have been living. At the same time, they are physically present in a different economic environment. This creates a mismatch between expectation and reality.

That mismatch is often experienced as “this feels expensive,” even when the objective price may not be unusual within the local context.

Why the same price feels different to different people

Every person develops a mental model of what things should cost. This model is not fixed. It is shaped by income, environment, frequency of spending, and even the culture of consumption around them.

Over time, what becomes “normal” is not the actual price of things, but the pattern of spending that the brain repeatedly observes.

For someone living in India, that pattern is consistent and reinforced daily. For someone living abroad, a different pattern becomes normal. When these two patterns collide, the brain does not merge them smoothly. Instead, it compares them.

So the same expense can feel perfectly ordinary to one person and unusually high to another, even when both are financially rational. The difference is not in intelligence or awareness. It is in the reference system being used.

Why short visits make this feeling stronger

The perception of expense becomes even sharper during short visits because of how spending is experienced.

In everyday life, expenses are distributed across weeks and months. The brain gradually normalises them and stops paying attention to each individual transaction. Spending becomes part of routine background behaviour.

During a short visit, however, spending is compressed into a short time window. Each transaction becomes more visible. Instead of blending into a monthly rhythm, every purchase is experienced as a separate decision.

This increases what psychologists call salience, which is simply the degree of attention the brain gives to something. When salience increases, the same price feels more significant than it would in a routine setting.

Memory also plays a quiet role

Another important factor is that people often carry outdated mental snapshots of prices. If someone has not lived in India for a long time, their internal reference point may still be based on older price levels.

When they return, they are not only comparing with their foreign experience, but also with an older version of the local economy stored in memory. This creates an additional layer of mismatch.

So the perception of “expensive” is not only about current prices versus foreign prices. It is also about current prices versus remembered prices.

So is it really expensive?

There is no single answer to that question because “expensive” is not an objective property. It is a perception shaped by context.

To answer this properly, we need to step away from emotion and look at two economic concepts: CPI (Consumer Price Index) and PPP (Purchasing Power Parity).

CPI tells us how prices move within a country over time. PPP helps compare what the same money can actually buy across countries. When we apply PPP logic, Ireland is not just “a bit more expensive” than India. In many everyday categories, including fuel, it can be roughly 2.5 to 3 times more expensive in real consumption terms, depending on taxes and market conditions.

Take fuel as a simple example. Recent European Commission and market data show petrol in Ireland is roughly in the range of €1.75 to €1.90 per litre in 2026 . In India, retail petrol prices are roughly around ₹95–₹105 per litre depending on the state .

Now compare this through purchasing power logic.

If we use a simple PPP-style adjustment, where Ireland is approximately 3 times higher cost in general consumption power compared to India, then an “equivalent” fuel price for Ireland (in Indian terms) would be expected to land around three times the Indian price when converted into the same economic baseline.

In that sense, petrol in Ireland is not just higher in nominal currency terms — it is higher even after adjusting for local income levels and purchasing power differences. This is why, despite similar global oil pricing, the lived experience of paying for fuel in Ireland feels heavier on monthly income than in India.

Now consider another example: everyday eating out.

A basic mid-range restaurant meal in India might cost what feels like a standard discretionary expense in a local income context. In Ireland, a similar casual dining experience can often cost multiple times more in absolute currency terms. Even after adjusting for wages, the share of monthly income spent on the same meal is typically higher in Ireland than in India.

This is exactly what PPP tries to capture: not whether something looks cheaper or more expensive on paper, but how much “work time” it takes to afford it.

So when we compare across countries properly, the conclusion is not that one place is universally expensive or cheap. It is that prices only make sense when tied to local income and local economic structure.

Without that adjustment, comparisons become misleading — and that is where most confusion in everyday conversations comes from.

The real insight

When returning visitors say that things feel expensive in India, it is not a statement about the country or its cost of living. It is a temporary adjustment process in the brain.

The mind is trying to switch between two different economic environments, each with its own sense of normal. During that transition, comparison becomes unavoidable.

What appears to be a judgment about price is often just a reflection of perspective. And perspective, unlike price, is never fixed.There is no single answer to that question because “expensive” is not an objective property. It is a perception shaped by context.

Behavioural research consistently shows that people respond more to relative change than to absolute value. Kahneman and Tversky’s work demonstrated that human judgment is deeply anchored to comparison rather than calculation.

This is why the same price can feel normal in one situation and high in another, even for the same person. The difference is not in the number itself, but in the mental frame being used to interpret it.