I wouldn't use the word "idiotic", but cost of living is highly situational. The cost of living adjustment for someone who can have three roommates is different than the cost of living adjustment for a family of five.

Also, cost of living adjustments should only be applied to subsistence-level, locally-priced expenses (i.e. rent, gas prices, fresh groceries, etc.). You don't want the $X you are putting into savings every year to be adjusted down because you moved to a cheaper zip code.