Neighbourhood Effects in Germany

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Thesis/Degree/Other Honours



Neighbourhood effects are effects on individual-level outcomes that can be attributed to differential neighbourhood contexts. This study looks at neighbourhood effects in Germany, drawing on a unique dataset, the German Socio-economic Panel Study (SOEP) matched with micro-marketing indicators of population characteristics at different geographical scales.
The research focuses on neighbourhood effects on happiness. Relative deprivation theory suggests that individuals are happier the better their relative income position in the neighbourhood is. To test this theory we estimate micro-economic happiness models with controls for own income and for neighbourhood income at the zip-code level (roughly 4,500 households) (Chapter 3). We find positive associations between a higher neighbourhood income and life satisfaction, which refutes relative deprivation theory. The positive correlation is robust but not statistically significant.
We argue that we might be using too big a geographical unit to identify a negative comparison effect and systematically include income measures at more immediate neighbourhood scales (Chapter 4). Effects are positive at all scales of neighbourhood, but significant only at more immediate scales. As different effects may operate at different levels simultaneously we control for neighbourhood income at multiple scales. Effects at the market-cell level (roughly 400 households) are most marked. At the street-section level (roughly 25 households) we find negative correlations but these are statistically insignificant.
Close neighbours may have become insignificant as people have become more mobile and operate in many contexts. We analyse whether increases in residential, physical and virtual mobility are associated with changes in personal interaction with neighbours (Chapter 5). All three kinds of mobility are negatively associated with visiting neighbours, and Internet use also with visiting family. As Internet use is on the rise, visiting may further decline in the future. But the results suggest that the Internet effect may not persist as more people use it.



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