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Economic satisfaction and income rank in small neighbourhoods

Author

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  • Andrew E. Clark

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, IZA - Institute for the Study of Labor - IZA, PJSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)

  • Nicolai Kristensen

    (Danish Institute of Governmental Research - AKF, Aarhus University [Aarhus])

  • Niels Westergård-Nielsen

    (IZA - Institute for the Study of Labor - IZA, Danish Institute of Governmental Research - AKF, Aarhus University [Aarhus])

Abstract

We contribute to the literature on well-being and comparisons by appealing to new Danish data dividing the country up into around 9000 small neighbourhoods. Administrative data provides us with the income of every person in each of these neighbourhoods. This income information is matched to demographic and economic satisfaction variables from eight years of Danish ECHP data. Panel regression analysis shows that, conditional on own household income, respondents report higher satisfaction levels when their neighbours are richer. However, the individuals are rank-sensitive: conditional on own income and neighbourhood median income, individuals are more satisfied as their percentile neighbourhood ranking improves. A ten percentage point rise in rank (i.e. from 40 th to 20 th position in a 200-household cell) is worth 0.11 on a one to six scale, which is a large marginal effect in satisfaction terms.

Suggested Citation

  • Andrew E. Clark & Nicolai Kristensen & Niels Westergård-Nielsen, 2008. "Economic satisfaction and income rank in small neighbourhoods," PSE Working Papers halshs-00586254, HAL.
    • Handle: RePEc:hal:psewpa:halshs-00586254
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00586254
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    References listed on IDEAS

    as
    1. Anne Bolster & Simon Burgess & Ron Johnston & Kelvyn Jones & Carol Propper & Rebecca Sarker, 2007. "Neighbourhoods, households and income dynamics: a semi-parametric investigation of neighbourhood effects," Journal of Economic Geography, Oxford University Press, vol. 7(1), pages 1-38, January.
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    More about this item

    Keywords

    satisfaction; neighbours; income comparisons; geo-coded data;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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