Neighbourhood Effects: Can We Measure Them and Does it Matter?

Abstract

Renewed interest in disadvantaged neighbourhoods is generating increasing research activity. Current work includes qualitative community studies and quantitative investigations of area effects on individual outcomes. This paper criticises the contribution of area effects research to date. Methodological and data constraints mean that quantitative studies often operationalise a weak conception of neighbourhood that does not reflect the understanding gained from qualitative work. These constraints present a barrier to testing specific theories that might usefully inform policy, while exaggerated claims are made about the policy relevance of more generic work. The paper concludes that area effects should be accorded less significance in the broad debate on area-based policy. Multi-disciplinary work is needed to develop studies that can influence the design of specific programmes.

JEL Classification: I30