07/05/21
5 min read
In the second part of our series on well-being, people and places, Dr Patricia Melo, Dr Gundi Knies and Raj Patel explore the presence of place effects, the connection between spatial and social inequalities and implications for policymakers.
The idea that where we live affects our experiences and outcomes in life is not new. Recent findings though expose the way communities have changed over the recent decades, with many parts of the UK experiencing a falling sense of belonging and weaker social institutions. So, how can the government’s drive to ‘level-up’ measurably improve the quality of life of residents?
Different places offer different opportunities to get on well in life. Some places have more productive environments for residents to flourish than others. Indeed, many factors contribute to the spatial distribution of opportunities – for example access to, and quality of, economic, social, and cultural resources. No single factor can explain how these spatial disparities in access to valuable resources come about.
From deficient resources and peripheral locations to weak social fabric and poor environmental conditions, social theory predicts a range of negative consequences of such spatial disparities. What seems clear is that when several factors interconnect to concentrate disadvantage in certain neighbourhoods, living in these contexts makes life even more challenging for the residents, independent of their personal and family resources. Scholars have termed this phenomenon as ‘neighbourhood effects’ (or ‘place effects’) and refer to the impact of the neighbourhood context on individuals’ outcomes that cannot be explained by their past and present personal characteristics, particularly their family background. Taking this perspective, spatial and social inequalities are intimately linked to each other, which in turn means that public policies aimed at reducing socio-economic inequalities between people should pay attention to the resources available in people’s residential areas.
The supposed linkages between the individual and spatial concentration of disadvantage have influenced the delivery of public policies in multiple ways, mainly in the form of ‘spatial targeting’ and ‘place-based approaches’ (or ‘area-based initiatives’). Spatial targeting follows a redistribution logic and usually consists of positive discrimination measures or support programmes that favour less developed neighbourhoods, cities or regions. An example is the £3.6 billion Towns Fund and a new follow-up £4.8 billion Levelling Up Fund for investment in infrastructure that improves everyday life across the UK – such as town centre and high street regeneration, local transport projects, and cultural and heritage assets. Parts of the former have now been rolled into the Levelling Up Fund.
Area-based initiatives to tackle social disadvantage
Area-based initiatives are better understood as a multilevel, multi-actor governance approach where the local stakeholders (that is, residents, associations, businesses, etc.) co-design and implement development measures. The use of area-based initiatives and spatial targeting to tackle social disadvantage tends to provoke diverse reactions. Some view them as important means of democratic renewal and community engagement to solve problems in deprived areas. In contrast, others regard them as diversions from more fundamental polices to tackle the root cause of inequality and deprivation.
Economists often argue against spatially targeted policies if there is no evidence of place effects on people’s well-being. The main argument brought forward is that the allocation of resources to deprived areas (however they may be defined) at the expense of non-deprived areas will only displace the problem elsewhere, thus leading to a zero-sum game. A more efficient alternative would be to target people directly rather than the places where they live. This is not least because not all personally disadvantaged people live in the most disadvantaged areas; there is a lot of heterogeneity. In other words, efficient spatial targeting policies would need supporting evidence on the presence of neighbourhood effects. Although the legitimacy of place-based policies, defined as above, does not depend on evidence of place effects, the debate has often been framed around whether neighbourhood effects exist.
Economists are not the only scholars who have studied neighbourhood effects, whether they exist and how important they are. Research in this field is very diverse and multidisciplinary, with longstanding contributions from sociologists, geographers, and epidemiologists, to name only a few, often adopting different approaches and focusing on different well-being outcomes. For example, economists and geographers tend to focus more on objective well-being outcomes such as earnings and employment. In contrast, sociologists and epidemiologists have studied subjective measures relating to people’s experienced quality of life (such as self-rated health and life satisfaction) with greater frequency.
The spatial contexts that produce better outcomes in one domain of life may not necessarily produce better outcomes in other life domains. When empirical studies adopt a comparative framework across different subjective and objective well-being outcomes, they might find differences. For example, we investigated whether individuals living in more deprived neighbourhoods in England and Wales reported lower life satisfaction (a subjective well-being outcome that interests policymakers as a catch-all measure of gross national happiness) as well as lower earnings (an objective well-being outcome implicated in many other life outcomes), exploiting longitudinal data that allowed us to throw some light on whether such well-being losses might be linked causally to neighbourhood deprivation.
Studying the presence of place effects is an endeavour plagued by intricate processes and dynamics. While it is intuitive to expect that local area conditions impact on individuals’ life chances as residing in structurally disadvantaged areas restrict individuals’ opportunities, this is not the same as saying that local deprivation causes individual deprivation. The reality is more complex because individuals living on the lowest incomes may only afford to live in the most deprived areas to start with, further contributing to local area deprivation. This distinction is crucial for policy aimed at improving individuals’ well-being and requires robust scholarly evidence. In fact, it is not uncommon for well-intended policies to aggravate the conditions of deprived neighbourhoods by making them even less affordable to families on lower incomes. Urban gentrification processes promoted by governments (e.g., London Docklands development programmes), for example, provide some insights into these unintended consequences.
To mitigate the effect of possible biases in our research, we considered alternative research designs and techniques and compared results across them. Our main finding is that the negative association between area deprivation and subjective and objective well-being is primarily due to what we refer to as a residential selection effect of families. Families with higher earnings and reporting higher levels of life satisfaction tend to live in better-off neighbourhoods and vice versa. In other words, the root cause for the observed well-being losses is not the level of deprivation in the neighbourhood.
Our analysis shows that differences in individual’s characteristics beyond education and family background impact the probability of earning more and being more satisfied with life. In a companion analysis, presented in the final report of our Nuffield-funded project, we also confirmed this finding for two further subjective well-being outcomes: the mental health and physical health components of health-related quality of life. We find that this conclusion holds regardless of the spatial scale at which neighbourhood deprivation is measured (i.e. from small neighbourhoods with a minimum population size of 100 people to larger areas with a minimum population size of 10,000 people living in the same Local Authority District, LAD).
Implications for policy
Even if there is no evidence of a neighbourhood effect, the fact that disadvantaged places are home to many lower-income families who face long-term disadvantages in many domains of life is a strong reason to focus policy attention in these areas. This is especially true for multilevel, cross-sectoral place-based approaches and may take the form of projects that allow individuals, local-level public and private sectors to work together in favour of their local communities and develop residents’ skills and competences. Such projects may also improve the environmental conditions of the neighbourhood, but that per se is not the goal. The goal is to improve the quality of local institutions created by the community for the community, its social fabric, an idea that is close to the work by Nobel prize laureate political economist Elinor Ostrom’s on community-based governance practices.
About the authors
Patricia Melo is an associate professor at the economics department of ISEG Lisbon School of Economics and Management, University of Lisbon. Her research interests relate to urban economics, economic geography, and transport economics. She has published extensively in these areas, particularly on issues relating to urban agglomeration economies and transport investment. She coordinates the project Transport Infrastructure and Urban Spatial Structure funded by the Portuguese research council, and has integrated several European research projects since 2013.
Gundi Knies is a quantitative social scientist trained in Sociology, Social Policy Analysis and Economics. Her research interests lie in life satisfaction, income inequality and neighbourhood effects research. She has worked and published on these topics as well as on survey methodology (linkage to administrative and geo-coded records in particular). She has been a member of the study design and implementation teams of the household panel studies Socio-economic Panel Study (SOEP, Germany) and Understanding Society (UKHLS, UK) since 2000, and of the European cohort study Growing up in Digital Europe, which will track children’s well-being over 25 years.
Raj Patel leads the Policy and Partnerships Unit at Understanding Society (UKHLS, UK) which engages and collaborates with government departments, charities, parliament, think tanks, and other organisations in the use of the study’s data and research findings. He plays a central role in ensuring the Study is recognised as a rich resource for addressing major policy questions facing society. An economist by profession, and having worked in government, charities, and business at a senior level, he brings extensive experience in policy development, knowledge exchange, running campaigns and strategic management.
