How happy are my neighbours? Modelling spatial spillover effects of well-being

TL;DR

This paper investigates how community happiness in Canada is influenced by neighboring communities' well-being and socioeconomic factors, revealing spatial spillover effects through econometric analysis.

Contribution

It introduces a theoretical utility model and applies spatial econometrics to quantify spillovers of well-being at the community level.

Findings

Community happiness is affected by neighboring communities' life satisfaction.

Socioeconomic factors like income and unemployment influence community well-being.

Clusters of similar happiness levels are identified geographically.

Abstract

This article uses data of subjective Life Satisfaction aggregated to the community level in Canada and examines the spatial interdependencies and spatial spillovers of community happiness. A theoretical model of utility is presented. Using spatial econometric techniques, we find that the utility of community, proxied by subjective measures of life satisfaction, is affected both by the utility of neighbouring communities as well as by the latter's average household income and unemployment rate. Shared cultural traits and institutions may justify such spillovers. The results are robust to the different binary contiguity spatial weights matrices used and to the various econometric models. Clusters of both high-high and low-low in Life Satisfaction communities are also found based on the Moran's I test