Does it or Doesn't it? Geographic Differences and the Costs of Living

Zimmerman, Julie N.; Ham, Sunny; Frank, Sarah M.

doi:10.1526/003601108785766561

Cited by 16 publications

(19 citation statements)

References 21 publications

(33 reference statements)

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“…further, it may not always be the case that rural areas are less expensive than urban areas when expenses other than housing are taken into account. food may be more expensive in rural areas because there are fewer grocery stores with lower purchasing power; transportation costs can be higher because of the longer distances to traverse (Zimmerman, Ham, and frank 2008). However, housing is a very large proportion of a family's budget, and it has been steadily growing over time; housing costs are unlikely to be outweighed by other expenses.…”

Section: Limitationsmentioning

confidence: 99%

“…A further advantage of the SPM is that it adjusts the poverty thresholds of households according to their geographic location—that is, it accounts for relative cost of living in a given area, compared to the national average. These adjustments in the SPM do not change the poverty threshold of the nation on the whole but become very important when investigating poverty in rural versus urban areas (Zimmerman, Ham, and Frank 2008).…”

mentioning

confidence: 99%

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Long-Term Trends in Rural and Urban Poverty: New Insights Using a Historical Supplemental Poverty Measure

Nolan¹,

Wimer²

2017

The ANNALS of the American Academy of Political and Social Scie

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Poverty has a strong relationship to geography in the United States. Previous research has found that rural areas have higher average poverty rates than urban areas, but the new supplemental poverty measure (SPM) has shown in recent years that urban areas have higher average poverty. In this article, we analyze poverty trends from 1967 to 2014 in rural and urban America, using the improved SPM metrics. We find a dramatic decline in poverty in rural areas, and also show that the geographic adjustment of the poverty threshold in the SPM (which lowers poverty thresholds in less expensive areas and raises them in more expensive areas) is an important explanatory factor. We also find that changes in the demographic and economic characteristics of rural and urban residents help to explain the decline. Last, we investigate whether migration of the poor between rural and urban areas helps to account for differential poverty trends, but we find little evidence in support of that hypothesis.

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Section: Limitationsmentioning

confidence: 99%

mentioning

confidence: 99%

Long-Term Trends in Rural and Urban Poverty: New Insights Using a Historical Supplemental Poverty Measure

Nolan¹,

Wimer²

2017

The ANNALS of the American Academy of Political and Social Scie

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“…On the surface, these demographic and economic differences likely reflect and produce differences in cost of living. However, these differences may be much smaller than believed by the general public and researchers (Ghelfi 1987;Nord 2009;Zimmerman et al 2008). One study finds that outside of the largest metro areas, the so-called 'big-mac' index-a measure often used to capture local variation in food prices-has little geographic variation (Loverridge and Paredas 2018).…”

Section: Cost Of Living In Metropolitan and Non-metropolitan Areasmentioning

confidence: 78%

Cost of living variation, non-metropolitan America, and implications for the Supplemental Poverty Measure

Mueller¹,

Brooks²,

Pacas³

2021

Preprint

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Poverty scholarship in the United States is increasingly reliant upon the Supplemental Poverty Measure (SPM) as opposed to the Official Poverty Measure of the United States for research and policy analysis. However, the SPM still faces several critiques from scholars focused on poverty of non-metropolitan areas. Key among these critiques is the geographic adjustment for cost of living employed in the SPM, which is based solely upon median rental costs and pools together all non-metropolitan counties within each state. Here, we evaluate the current geographic adjustment of the SPM using both microdata and aggregate data from the American Community Survey for 2014-2018. By comparing housing costs, tenure, and commuting, we determine median rent is likely an appropriate basis for geographic adjustment. However, by demonstrating the wide variability between median rents of non-metropolitan counties within the same state, we show that the current operationalization of this geographic adjustment is sorely lacking.

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“…While the Kurre/C2ER method has merit in that it is extremely low cost, a potential drawback of the approach is that missing counties (primarily rural) could be systematically different than the participating counties (primarily urban). Zimmerman, Ham, and Frank (2008) explored this potential selection bias by extending the C2ER primary data collection techniques to a sample of rural Kentucky places and found price differences from urban areas, but no consistent pattern (some prices were higher, some lower). The method we propose here is more costly than Kurre’s or other model-based approaches but relies primarily on direct observation rather than imputation.…”

Section: Literature Reviewmentioning

confidence: 99%

Are Rural Costs of Living Lower? Evidence from a Big Mac Index Approach

Loveridge

Paredes

2016

International Regional Science Review

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Rural leaders can point to low housing costs as a reason that their area should be competitive for business attraction. To what extent do rural housing costs offset transportation and other locational disadvantages in cost structures? The United States lacks information to systematically answer the question. We adapt a strategy employed by The Economist in exploring purchasing power parity: the Big Mac index. We gather information on Big Mac prices with a random sample of restaurants across the contiguous United States. We find that core metro counties exhibit slightly higher Big Mac prices than other counties, but that differences across the balance of the rural–urban continuum code are not significant, implying that costs in a metroadjacent county are not different than areas that are much more rural. We show that some groups of states exhibit lower prices, especially in the southeast. Furthermore, we test for the presence of spatial monopoly and find that distance to other MacDonald’s restaurants has some influence on price. Stores at a greater distance from their competitors tend to charge more, ceteris paribus. We also show our results are consistent with other localized estimates of living costs. Our general findings could help rural decision makers determine whether their area truly holds cost advantages for firms looking to relocate.

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Does it or Doesn't it? Geographic Differences and the Costs of Living

Cited by 16 publications

References 21 publications

Long-Term Trends in Rural and Urban Poverty: New Insights Using a Historical Supplemental Poverty Measure

Long-Term Trends in Rural and Urban Poverty: New Insights Using a Historical Supplemental Poverty Measure

Cost of living variation, non-metropolitan America, and implications for the Supplemental Poverty Measure

Are Rural Costs of Living Lower? Evidence from a Big Mac Index Approach

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