Balearics cost of insularity has been factored in.

A study by the Institute of Regions and Metropolitan Districts in Barcelona has concluded that the cost of living in the Balearics is 2.8% higher than the national Spanish average, while there is also great regional disparity in terms of purchasing power.

At its most extreme, the disparity between Madrid and Extremadura is 29.3%. With regard to the cost of living, the Balearics is just one of four regions above the national average. The other three have higher costs of living - Madrid is 15.7% above the average, Catalonia 7.6% and the Basque Country 7.1%. Of the regions below the average, the Canary Islands are 3.4% and the lowest is Extremadura on 13.6%.

The study has considered two variables - the cost to rent and disposable income. Alex Costa, researcher at Barcelona town hall's data office and the study's co-author, explains that the cost of insularity in the Balearics is factored into the regression model that has been used. He says that the findings are realistic. "The Balearics is the fourth most expensive region."

He adds: "We are talking about an average cost of living, not the minimum cost of living in each region. The fact that the cost of living is higher in the Basque Country or Catalonia than in the Balearics doesn't mean that the minimum is not higher in the Balearics. It may be higher."

With regard to disposable income per capita, the Balearics is fifth in the country, 16% above the national average. However, if this income is adjusted to take account of the cost of living, the Balearics is third and 12.9% above the average. Madrid offers a striking example of taking cost of living into account. The region goes from being fourth in terms of disposable income to tenth.