Neighbors' Income, Public Goods, and Well‐Being

22 Pages Posted: 11 May 2019

See all articles by Abel Brodeur

Abel Brodeur

University of Ottawa - Department of Economics; IZA Institute of Labor Economics

Sarah Flèche

London School of Economics & Political Science (LSE) - London School of Economics

Date Written: June 2019

Abstract

How does neighbors' income affect individual well‐being? Our analysis is based on rich U.S. 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 of the effect of own income on self‐reported well‐being.

Keywords: neighbors' income, public goods, amenities, relative deprivation, well‐being

Suggested Citation

Brodeur, Abel and Flèche, Sarah, Neighbors' Income, Public Goods, and Well‐Being (June 2019). Review of Income and Wealth, Vol. 65, Issue 2, pp. 217-238, 2019. Available at SSRN: https://ssrn.com/abstract=3385034 or http://dx.doi.org/10.1111/roiw.12367

Abel Brodeur (Contact Author)

University of Ottawa - Department of Economics ( email )

200 Wilbrod Street
Ottawa, Ontario K1N 6N5
Canada

HOME PAGE: http://https://sites.google.com/site/abelbrodeur/

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Sarah Flèche

London School of Economics & Political Science (LSE) - London School of Economics ( email )

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