The flight to Oslo left me thirsty, and I needed some water before boarding the express train into the city center. A friendly young man in the airport shop apologized as he charged me 27 Norwegian kroner for the bottle. "Norway is a very expensive country," he said with a shrug as I handed over the coins. I hadn't worked out the exchange rate yet, but on the train I figured out that the bottle cost just over $4. Not enough to break the bank, but enough to make me think twice about throwing away the half-empty bottle when I got to town. I kept it to drink at the hotel.

The man at the airport was blasé, but the Economist results have unnerved Norwegians who depend on visitors for their livelihood. They are worried that the publicity may keep people away, even though Oslo is a safe, clean city surrounded by magnificent fjords and low-rolling hills that are perfect for summer hiking or winter cross-country skiing. Many argue that the survey, which focuses on the costs of goods and services, was flawed.

Arlene Lindbichler, for one, doesn't like to be reminded of Oslo's new status. She is a freelance Oslo guide, fluent in five languages,­ who fears that the poll results may send her potential clients elsewhere. She points out, with some justification, that prices here are not really out of line with other European capitals, and in some cases they're lower. She was certainly right about hotels. I was, for example, able to stay at one of Oslo's grand old hotels, the Bristol, for about $165 a night, far less than the cost of a similar establishment in my home city of London. A terrific breakfast buffet with a wide array of smoked salmon, creamed herring, and other fish was included.

"It's not the world's most expensive city; that's just wrong," says Lindbichler, who moved to Oslo from Austria in part because of the outdoor recreation available here. "And there's no other European capital where you can take the subway to the end of the line and walk out, rent skis, and have 1,600 miles of groomed cross-country trails right in front of you. No other capital has downhill skiing within the city limits. So much of what we have here is free - cross-country skiing doesn't cost a single krone."

Indeed, in wintertime it does seem that the city's spirit can be found on the Number One subway line, which winds up to the hills and forests that surround the city center. Young, old, and everyone in between seem to take to the slopes on weekend days, and most of them will not pay a dime for the experience, since the cross-country trails and bobsled runs are free. Snowboards, bobsleds, makeshift sleighs, and simple plastic platters are common on the subway, which offers a wonderful view of Oslo's harbor and fjords as it climbs. In the mountains, having a hot chocolate on the sun terrace of a restaurant, it's hard to believe you are still in the city. A magical winter silence prevails - it seems as if you can hear the snowflakes landing.