The neighbour’s effect on well-being: how local relative income differentials affect resident's subjective well-being

ABSTRACT:

Studies relating income to subjective well‐being have found that both absolute and relative income determine individual well‐being. This paper assesses the effect of relative income on subjective well‐being, and the spatial scale on which this comparison takes place. This study employs spatial data on individual well‐being, health, socio‐economic status, and psychometrics. The findings suggest that relative income is a significant predictor of subjective well‐being. The relationship is negative for high‐income households, but absent or reversed for low income households showing an asymmetric relationship. The spatial scale for the comparison effect is small, with a bandwidth of 100 metres providing the best fit.