Cigarette Among Students
19
Poverty and place: determining causation
He also quotes John Stuart Mill:
... men do not desire to be rich, but richer than other men
In attempting to test for the signifi cance of this proposition and quantify its effects, there are a number of methodological problems – particularly the possibility that welfare is itself a relative concept. However, Luttmer (2005) goes to considerable lengths to eliminate possible biases from his estimates, including testing against absolute measures related to welfare, such as marital confl icts, as well as against reported personal welfare itself. He analyses a sample of about 10,000 individuals from two phases
6
of the National Survey of Families and Households living in a sample of 965 neighbourhoods – or 555 neighbourhoods for the subsample of neighbourhoods with respondents living in them at both time periods. His fi ndings are striking. Roughly speaking losing £1,000 of income seems to make people feel about as much worse off as their neighbour gaining £1,000! The estimated impact of a positive change of household income on reported welfare is quantitatively almost the same as a similar, negative, change in neighbourhood mean incomes.
He subdivides the sample into households of single adults, couples living together at both sampling dates (stable couples) and adults living with different partners in the second time period. The strong negative impact of neighbours being richer on people’s sense of well-being estimated for the three groups together turns out to be explained mainly by the (large) subsample of stable couples in the data set. Single people do not seem to experience a loss of a sense of well-being from neighbours’ extra income. There is no statistically signifi cant impact of neighbourhood income on measures of welfare for single people. Moreover, the effects are stronger for individuals who socialise with neighbours and the effect of neighbours’ incomes is stronger if the neighbour
Poverty and place: determining causation
He also quotes John Stuart Mill:
... men do not desire to be rich, but richer than other men
In attempting to test for the signifi cance of this proposition and quantify its effects, there are a number of methodological problems – particularly the possibility that welfare is itself a relative concept. However, Luttmer (2005) goes to considerable lengths to eliminate possible biases from his estimates, including testing against absolute measures related to welfare, such as marital confl icts, as well as against reported personal welfare itself. He analyses a sample of about 10,000 individuals from two phases
6
of the National Survey of Families and Households living in a sample of 965 neighbourhoods – or 555 neighbourhoods for the subsample of neighbourhoods with respondents living in them at both time periods. His fi ndings are striking. Roughly speaking losing £1,000 of income seems to make people feel about as much worse off as their neighbour gaining £1,000! The estimated impact of a positive change of household income on reported welfare is quantitatively almost the same as a similar, negative, change in neighbourhood mean incomes.
He subdivides the sample into households of single adults, couples living together at both sampling dates (stable couples) and adults living with different partners in the second time period. The strong negative impact of neighbours being richer on people’s sense of well-being estimated for the three groups together turns out to be explained mainly by the (large) subsample of stable couples in the data set. Single people do not seem to experience a loss of a sense of well-being from neighbours’ extra income. There is no statistically signifi cant impact of neighbourhood income on measures of welfare for single people. Moreover, the effects are stronger for individuals who socialise with neighbours and the effect of neighbours’ incomes is stronger if the neighbour