Exactly. "Purchasing power parity (PPP) is a measurement of prices in different countries that uses the prices of specific goods to compare the absolute purchasing power of the countries' currencies." [0]
The Big Mac Index is a more approachable way of looking at it (and also shockingly accurate). For instance, in this case a Big Mac is $5.71USD in America. However, a Big Mac in Taiwan costs 71NTD ($2.44USD). This means that your $60,000USD salary in Taiwan will go ~2.34X further in Taiwan than a $60,000USD salary in America. So a 60K USD salary in Taiwan is roughly equivalent to a 140K salary in the US. [1]
Using market exchange rates only makes sense when you earn in one country and you're planning on buying something from a different country. If you earn and spend in the same country (for instance, looking at moving from Taiwan to the US), you want absolute purchasing power, not relative, so PPP compensates for that.
It’s also representative of a basket of commodities, between the wheat, lettuce, beef, sesame, salt, pepper, tomato, cucumber. These are basic commodities and a decent proxy all things considered.
