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Economic satisfaction and income rank in small neighbourhoods
Andrew E. Clark1, 2, 3, Nicolai Kristensen4, 5, Niels Westergård-Nielsen2, 4, 5

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.
1 :  EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics
2 :  IZA - Institute for the Study of Labor
3 :  PSE - Paris-Jourdan Sciences Economiques
4 :  Danish Institute of Governmental Research
5 :  University of Aarhus
satisfaction – neighbours – income comparisons – geo-coded data