This is a very complicated question, because it depends on so many things. I am assuming that you are using the US as a reference.
Everything that includes a significant amount of labor involved is cheaper. For example, Panamanians get around $5/day for domestic help (female), and between $10 to $12 for light cement work, manual excavation, light maintenance work (male). So if you have the ability to speak Spanish and can hire and direct people to build, you could build a house substantially cheaper here.
If you want to buy a new house here, you will be paying more than you would in many places in the US. I base this on the quality of construction, the quality of materials, and the site location.
Clothes are cheaper here generally because you don't need heavy weather type clothes, and many are made in Cuba, China and other cheap sources. Quality is questionable - you have to look carefully to get good quality. Most things here are not made in the US. My wife, who likes to sew, likes the fabric stores here. Prices for fabric start at $1 a yard on up to about $4 a yard for the better quality. She is in heaven in the fabric stores!
Our lifestyle includes living on an acre in the country with a few neighbors. We live in the house we built, eat many things from our garden and go to town about every two weeks. We are comfortably living on $600/month including Sat TV ($40/month), Internet ($60/month). Diesel is almost $4/gal, we have an old '91 Nissan Patrol which uses a lot of diesel, but a tank lasts about 2 months. Cellphone is about $10 each/month. Our food is about $250/month, electricity is about $40. Our doctors charge $25 for an appointment, MRI is $600, complete general blood test about $90. New cars are about the same as in the US. I think you can buy some cheaper if you are looking for one of those economical small cars from China. Our entertainment is socializing with our neighbors, watching a little tv, gardening, and other misc hobby stuff.
I really don't know what the folks are paying for living in other parts, we just don't see any other gringos, except occasionally at the supermarket.
So that's my take on the costs of living here.
The price of tropical climate? A bug a day you have never seen before, butterflies that defy the imagination, sitting on the patio EVERY day in shirtsleeves. 
Is it really a lot cheaper living there?
Thank you, I appreciate the input. I'm sure it
matters what part of the country we're talking
about but most of the Internet talks about how
much cheaper it is to buy a house, even if it
were beach front compared to the US and its
like, who do I believe. And unless building
materials are more expensive, why would it
cost more?
Don
What I was referring to was comparing a house in, say, rural Missouri or Michigan with a house in rural Panama. Here,the price of a 3 bedroom common ranch style anywhere from about $120,000 more or less.
Beachfront houses here rarely have titles, but Rights of Possession, because it is illegal to own property on the beach here and also within 50km (?) of the borders. Buying a titled house on the beach here would be lots of bucks - $300K or more. There are beach front properties in Northern California for $200K. There are plans on selling beach lots through some new change in the government, but I'm not sure of the process. It used to be political.
You should be confused, as it is the situation of gringo vs Panamanian prices, political decisions for properties on the beach, and prices from Real Estate interests on the Internet.
You can find good deals here, but you cannot use the internet as a reference. You need to come down and explore the market face to face. I know of a newly built house in a small community with not much water, dry area, next to a cantina on about 3000 meters of land. It's up for sale for $120K, but the valuation of housing there seems to put it's value at about $40,000, even though it cost about $70,000 to build.
Also, you need to understand this is what I see and have learned, which may be totally different than a Real Estate Agent from Boquete or Panama.
Articles to help you in your expat project in Panama
Opening a bank account is natural part of the process of living in a new country. It provides convenience ...
It is advisable to seek customs information through the official channels before travelling to Panama. Because ...
Education in Panama is compulsory for children from 6 years. In general, children attend pre-primary school as ...
Getting married in Panama is relatively easy, even if you are not a resident of the country. The minimum age is ...
A country as conducive to the outdoor life as Panama almost inevitably develops sport-lovers. In this case the ...
Panama has a good number of higher education institutions including some large universities. The public ones are ...
