Familiar Faces, Worn Out Places: The Effect of Personal and Place Prosperity On Well-Being

Higher rates of income inequality are correlated with lower average well-being across different domains (such as health, financial security, friendship etc.) across nations. It is unclear, however, whether this pattern is driven by income differences between people or if places also play a role. In this paper, I test this by constructing a Se- nian Capability Index of well-being and then testing the relative role of personal and place-based prosperity on its domains using linked individual-area data. I find that while personal income has the strongest link to well-being domains, places also also have a significant, non-uniform, association as well. These effects differ between the labour market and neighbourhood level spatial scales. Local labour market prosperity gives its residents higher potential incomes and is associated with greater financial se- curity and more friends. Moving to a more prosperous labour market also indirectly improves well-being by increasing potential incomes. Neighbourhood prosperity is as- sociated with greater overall well-being, physical security, and a lower probability of death. These results suggest that policies aimed at improving personal and place-based characteristics are needed to create a “good life” for all citizens.