The cost of living in rural areas of Scotland
This thesis provides a comprehensive analysis of a series of prices surveys which were carried out in Scotland during 1979 - 1981. The Rural Scotland Price Surveys (RSPS) which were sponsored by the Scottish Consumer Council and the Highlands and Islands Development Board, were designed to determine if any substantial inequalities existed between consumer advantages throughout Scotland. In an attempt to confirm that the RSPS index provided a reasonable assessment of the cost-of-living index for the communities under observation, the author solved a Linear Expenditure System for Scotland, the parameters of the system then allowing an equation for an index number of the Klein-Rubin type to be formed. The solution of the Linear Expenditure System also allowed a further index, but again of the Laspeyres type, to be constructed. These two indices may be referred to as the Klein-Rubin index and the LES-Laspeyres index respectively. An examination of the data supplied by the price surveys allows several conclusions to be drawn about the variations in price which occur throughout Scotland. Consumers in the remote areas do indeed pay higher prices than those in the base city (in this case, Aberdeen) for most commodities, but the city-based consumer is at a disadvantage for some items. However, the consumer in rural Scotland does appear to experience a higher overall cost-of-living as measured by each of the three indices. Accurate statistical testing of the survey results confirmed that, if all the sampled locations were considered, then the costs of goods representing the four categories food, other goods, housing and transport, were significantly greater in rural Scotland than in Aberdeen (the base locality), while these areas experienced a cost advantage over Aberdeen in the servicing sector. The cost-of-living in these localities was also found to be substantially greater than in the base city, although evidence did exist which suggested that the RSPS index overstated the differential very slightly. An examination of the cost relatives for the three regional types indicated that the urban dweller faced a cost advantage over his rural counterpart in the food and other goods categories, but no significant variation existed between the two sets of communities in the other groups. Over the period examined, the urban cost-of-living became increasingly lower compared with the rural level, with evidence existing which showed that the difference was statistically significant in the last two periods covered. The urban consumer also experienced an advantage over the island dweller, having significantly lower costs in all but the servicing sector, this being reflected in the cost-of- living which was also significantly lower in the urban regions. However, the comparison of rural and island costs indicates that there is no evidence to suggest that the cost of food or services differs between the localities, although the rural consumer does face an advantage in the three remaining categories. These results indicate that the locational type does appear to influence the cost-of-living in a particular community, supporting the conclusions of a theory of spatial pricing which was derived. The models indicate that price would be inversely related, in the long run, to the size of the population of the market and to the population density ratio of the central to peripheral zones. Furthermore, the long term effect of lower average transportation costs per consumer is also to decrease the profit-maximising price, while higher marginal costs will force the price upwards. These conclusions were supported by a regression analysis of the results of the survey but, due to inherent problems in the data relating to the retail trade in remote areas of Scotland, the regression analysis did not provide an accurate breakdown of the forces acting on the cost-of-living in these regions. Thus confirmation of these conclusions still remains necessary. The variations in the cost-of-living throughout Scotland could be reduced, but virtually all the methods which could be used to reduce the differentials would require some form of subsidy being given to the remote regions. Government policies, which would give a direct subsidy to these areas, might be prevented because of the high cost involved, and a similar objection may be raised against projects introduced by local authorities or agencies concerned with rural areas of Scotland. It is also possible that community action - through the medium of co-operatives or voluntary bodies - could allow reductions to take place in the cost-of-living faced in remote areas. These agencies may appear to be preferable but, nevertheless, might still involve subsidising the community.