Does Your Neighborhood’s Income Distribution Matter? A Multi-scale Study of Financial Well-Being in the U.S.

Abstract

New research reveals spatial variation in a number of subjective measures like happiness and well-being. Yet, scholars remain divided over the geographic scale and attributes that matter. This paper examines how “geographic context”—one’s relative income position and the level of income inequality—is associated with individual financial well-being (FWB) at various geographic scales in the U.S. Drawing on data from the 1995 Midlife in the United States survey and the 1990 Census, I identify four major findings: (1) the geographic context is more likely to influence FWB as household income increases, as low-income individuals tend to report poorer FWB regardless of where they live; (2) high-income individuals tend to report greater FWB as their relative income position rises; (3) differences in FWB across income rankings are more pronounced as income inequality increases; and (4) geographic context has the greatest effect on FWB when measured at the extralocal level (labor market area), followed by the context at the local level (Census tract). These findings provide new insight into the salient attributes, as well as scale, of the geographic context that may help shape individual financial well-being.