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Neighbors' Income, Public Goods and Well-Being

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  • Abel Brodeur

    (Department of Economics, University of Ottawa, Ottawa, ON)

  • Sarah Flèche

    (Aix-Marseille School of Economics, Marseille, France)

Abstract

How does neighbors' income affect individual well-being? Our analysis is based on rich US local data from the Behavioral Risk Factor Surveillance System, which contains information on where respondents live and their self-reported well-being. We find that the effect of neighbors' income on individuals' self-reported well-being varies with the size of the neighborhood included. In smaller areas such as ZIP codes, we find a positive relationship between median income and individuals' life satisfaction, whereas it is the opposite at the county, MSA and state levels. We provide evidence that local public goods and local area characteristics such as unemployment, criminality and poverty rates drive the association between satisfaction and neighbors' income at the ZIP code level. The neighbors' income effects are mainly concentrated among poorer individuals and are as large as one-quarter the effect of own income on self-reported well-being.

Suggested Citation

  • Abel Brodeur & Sarah Flèche, 2017. "Neighbors' Income, Public Goods and Well-Being," Working Papers 1719E, University of Ottawa, Department of Economics.
    • Handle: RePEc:ott:wpaper:1719e
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    1. Silvia Emili & Federica Galli, 2022. "Self-perceptions and perceptions of peers: their role in understanding expenditure behaviours," Quality & Quantity: International Journal of Methodology, Springer, vol. 56(6), pages 4573-4597, December.
    2. John Ifcher & Homa Zarghamee & Dan Houser & Lina Diaz, 2020. "The relative income effect: an experiment," Experimental Economics, Springer;Economic Science Association, vol. 23(4), pages 1205-1234, December.
    3. Noy, Shakked & Sin, Isabelle, 2021. "The effects of neighbourhood and workplace income comparisons on subjective wellbeing," Journal of Economic Behavior & Organization, Elsevier, vol. 185(C), pages 918-945.
    4. Zhijian Zhang & Xueyuan Wang, 2021. "Ambition or Jealousy? It Depends on Whom you are Compared with," Journal of Happiness Studies, Springer, vol. 22(3), pages 1189-1215, March.
    5. Leonardo Becchetti & Fabio Pisani, 2021. "When Money Matters More: Long‐Term Illness and the Income/Life Satisfaction Slope," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 67(3), pages 616-638, September.
    6. Fumagalli, Elena & Fumagalli, Laura, 2022. "Subjective well-being and the gender composition of the reference group: Evidence from a survey experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 194(C), pages 196-219.
    7. Seonghoon Kim & Andrew J. Oswald, 2021. "Happy Lottery Winners and Lottery‐Ticket Bias," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 67(2), pages 317-333, June.
    8. Tiffany S. Neman, 2020. "Does Your Neighborhood’s Income Distribution Matter? A Multi-scale Study of Financial Well-Being in the U.S," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 152(3), pages 951-970, December.
    9. Thanasis Ziogas & Dimitris Ballas & Sierdjan Koster & Arjen Edzes, 2020. "How happy are my neighbours? Modelling spatial spillover effects of well-being," Papers 2007.11580, arXiv.org.

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    More about this item

    Keywords

    neighbors' income; public goods; amenities; relative deprivation; well-being.;
    All these keywords.

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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