Is it just Food? Geographic Differences in the Cost of Living

Two key features of food usistance programs' ability to meet local food needs are access and the . cost of food. The familiar assumption is that it costs less to live in a rum! area, However, research indicates food prices are higher in rural areas (c.r. Morris et aI.t 1992). Absent a national database on rural prices, experiments to adjust the poverty threshold rely on housing costs to account for geographic differences .in tho cost of living. The resulting measures would lower poverty rates for rural areas (Nord and Cook, 1995). and for the South (Short, 2001). If used for administrative purposes, this would also mean reductions in federal funding for the South (Nelson and Short, 2003). . Because of its potential wide-ranging policy impacts, the ability to assess geographic differences in the cost of living is important. The proposed research will investigate the question: if a. consumer made the same purchases in a rural and an urban area. wou1d they encounter the same prices? Hnot, why not? The proposed research examines local prices for a nationally compar.able market basket of goods and services (ACCRA. 2005). Since price data alone do not capture externalities such as access, contextual data will also be examined. If housing coSt differences do not accurately ret1ect differences in all costs of living, any adjustments to the current poverty threshold that rely solely on this measure would disproportionately disadvantage rural lI'eas and the families living there. especially in the South.