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Where the Streets Have a Name: Income Comparisons in the US

Author

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  • Brodeur, Abel

    () (University of Ottawa)

  • Flèche, Sarah

    () (CEP, London School of Economics)

Abstract

This paper analyses how neighbors' income affect agents' well-being using unprecedented data from the BRFSS and the City of Somerville. We conduct a multi-scale approach at the county, ZIP code and street-levels and find that the association between well-being and neighbors' income follows an inverted U-shaped pattern in the size of the area. We find a negative relationship between well-being and neighbors' income in the county of residence, but the opposite at the ZIP code-level. Our results are consistent with the fact that agents enjoy living in a rich ZIP code but also having poor faraway neighbors since they have preferences for high social status. We test explicitly this interpretation by including amenities and the relative rank in the local income distribution in our model. At the street-level, we find a negative association between neighbors' income and self-reported well-being indicating the presence of income comparisons between very close neighbors.

Suggested Citation

  • Brodeur, Abel & Flèche, Sarah, 2013. "Where the Streets Have a Name: Income Comparisons in the US," IZA Discussion Papers 7256, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp7256
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    Citations

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    Cited by:

    1. Ifcher, John & Zarghamee, Homa & Graham, Carol Lee, 2016. "Income Inequality and Well-Being in the U.S.: Evidence of Geographic-Scale- and Measure-Dependence," IZA Discussion Papers 10155, Institute for the Study of Labor (IZA).
    2. Godechot, Olivier & Senik, Claudia, 2015. "Wage comparisons in and out of the firm. Evidence from a matched employer–employee French database," Journal of Economic Behavior & Organization, Elsevier, vol. 117(C), pages 395-410.
    3. Abel Brodeur & Sarah Flèche, 2017. "Neighbors' Income, Public Goods and Well-Being," Working Papers 1719E, University of Ottawa, Department of Economics.
    4. Perez-Truglia, Ricardo, 2013. "A test of the conspicuous–consumption model using subjective well-being data," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 45(C), pages 146-154.
    5. Ioannides, Yannis M., 2015. "Neighborhoods to nations via social interactions," Economic Modelling, Elsevier, vol. 48(C), pages 5-15.
    6. Clark, Andrew E. & D'Ambrosio, Conchita, 2014. "Attitudes to Income Inequality: Experimental and Survey Evidence," IZA Discussion Papers 8136, Institute for the Study of Labor (IZA).
    7. Clément Bellet, 2017. "Essays on Inequality, Social Preferences and Consumer Behavior," Sciences Po publications info:hdl:2441/vbu6kd1s68o, Sciences Po.
    8. Bellet, Clement, 2017. "The paradox of the Joneses: superstar houses andmortgage frenzy in suburban America," LSE Research Online Documents on Economics 69044, London School of Economics and Political Science, LSE Library.
    9. Clement Bellet, 2017. "The Paradox of the Joneses: Superstar Houses and Mortgage Frenzy in Suburban America," CEP Discussion Papers dp1462, Centre for Economic Performance, LSE.

    More about this item

    Keywords

    income comparisons; rank; relative utility; social interactions; social status; well-being;

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • D00 - Microeconomics - - General - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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