Kinda-sorta. With a higher salary, living a below-average lifestyle for the area can lead to staggering savings rates and savings in absolute terms. For instance, saving even 23% of 120k is better than saving 30% of 90k.

And of course a lot of things cost the same regardless of where you live. Manufactured goods cost pretty much the same in India as in the US and sometimes more, because of import duties. Gasoline is significantly more expensive.

Right.. now going back to the India/US comparison, its pretty fair to say 99% of people in India will not immigrate to the US. So the hypothetical value of saving lots of money in the US to spend in India doesn't really apply. The SF/NYC analogy does not hold exactly to US/India.

Who said anything about saving in the US to spend in India? Saving in the Bay Area to spend in rural Montana is an equally valid comparison, cost-of-living wise.

The point I was making is that some things cost the same no matter where you live. The Indian dentist who wants to take a foreign vacation, buy an iPhone, or a car needs to spend more, relative to her income, than the American dentist. Purchasing power only holds for things that are labor-bound (mainly services, and goods that are labor-intensive to manufacture) rather than resource-bound.

Purchasing power is based on a basket of goods for the average consumer. It takes into account expenses like phones and cars - as you say, iPhones are still expensive but the basket would take that into account and purchasing power would be lowered accordingly.