Abstract
Mixed community policies are frequently justified by a belief in neighbourhood effects. As such they are essentially faith-based since there is scant evidence that increasing socio-economic diversity significantly improves the life chances of poorer residents. A key question that has to be addressed is whether living in a poor neighbourhood is a separate, independent cause of poverty? The chapter reviews the evidence from a wide range of neighbourhood effects studies designed to overcome problems with selection bias: studies based on quasi-experimental data and longitudinal individual level data from a variety of countries. The evidence supporting the significance and even the existence of neighbourhood effects is remarkably thin when subjected to rigorous evaluation. Based on this review it is argued that policies for mixed neighbourhoods treat the symptoms rather than the causes of poverty and that efforts to improve the lives of the poor would be more effectively directed towards people themselves rather than moving people around to mix neighbourhoods. Moreover, it was found that there are real welfare and productivity benefits from living in specialised neighbourhoods. Mixed neighbourhood policies risk of destroying these and the possible losses must be balanced against any potential benefits of reduced negative ‘neighbourhood effects’.
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Notes
- 1.
Section 106 (S106) of the Town and Country Planning Act 1990 allows a local planning authority (LPA) to negotiate a legally-binding agreement or ‘planning obligation’ with a developer as a condition of granting permission to develop. The obligation is termed a Section 106 Agreement. These agreements are a way of extracting so-called ‘planning gain’. Since planning policies in Britain tightly restrict the supply of land for development, obtaining permission to develop on attractive sites creates a windfall gain (see Cheshire and Sheppard 2005). S106 Agreements are used to extract a part of this windfall gain by forcing some contribution from the developer in kind, usually in the form of infrastructure, such as highways or recreational facilities or as ‘affordable’ housing: that is housing available at below market price for social tenants or ‘key’ workers such as teachers or police.
- 2.
In 2008 the Conservative Party candidate Boris Johnson won the GLA Mayoral election replacing Labour Party mayor Ken Livingstone.
- 3.
In the models discussed here all prices are estimated to vary not just as the quantity of the attribute in question changes (for example the first bathroom is worth a lot more than the fifth) but as the quantity of other attributes varies (for example, the price paid for more space inside a house of given size also varies with the size of the garden, or the value paid for primary school quality varies with the suitability of the house to accommodate children). As a result, this calculation of the impact on price of moving a house from the worst to best primary school catchment area can only be done by assuming some particular levels for all other attributes. Here it is assumed that all other attribute levels are equal to the sample mean, the sample being a random sample of houses sold in the local housing market in 1999/2000 used to estimate the model.
- 4.
And, of course, if property owners already living in more/less desirable neighbourhoods, experiencing rising/falling relative asset values too – see below.
- 5.
That is not because they want there to be worse schools or public parks but because there can only be one ‘best’ school or park. This is not the case with land supply which is intentionally restricted in order to implement urban containment policies.
- 6.
Including, of course, local policy. If access to schools is not determined by place of residence but by some other mechanism, for example, by lot, or by selective examination, then there would be no price paid via the housing market. Consistent with both this and demand for school quality being income elastic is the estimated hedonic price of school quality in Reading compared to Darlington in 1993 and 1997 respectively. Again looking at the ‘average’ house, the price per GCSE point improvement in Reading, where mean sampled incomes were £28,610 pa, was £243.9 while in 1997, in Darlington, where mean incomes were £23,422, it was £30.80. However, since not only were incomes lower in Darlington but allocation to schools was less tightly tied to home address, we cannot be sure what the contribution of each factor separately was to the estimated difference in the price of ‘school quality’.
- 7.
Housing and Community Development Act 1992.
- 8.
It is worth noting that these methodological deficiencies would have disbarred the study had it been a field trial for a new drug or medical procedure.
- 9.
Kling et al. (2005) report briefly on such factors as getting into fights, getting along with teachers, perceptions that school discipline was ‘fair’, having five or more friends and reported feelings of worthlessness, finding no significant differences on any measure. A wide range of educational, mental and physical health and behavioural indicators was examined in Kling and Liebman 2004. In general they reported some significant beneficial changes for girls but negative and mainly not significant effects for young males.
- 10.
Durlauf (2004) compared results of 25 studies published between 1982 and 2003. Outcome measures ranged from marriage rates and teenage pregnancies through school drop out rates to standard labour market measures, such as wages or unemployment. All studies surveyed were econometric in nature and while some found no evidence of neighbourhood effects, the majority did conclude there was an impact of neighbourhood on outcomes for individuals. However, as Durlauf notes, methodological problems are severe and such evidence was unlikely to convince those who were sceptical. He wrote before the methodologically most convincing studies, those of Oreopoulos (2003) and Kling et al. (2005, 2007), were available.
- 11.
Apart from the increase in boys’ arrests for property crime in the longer term, the cause of some of the improvements in health measures are unclear. For example Katz et al. (2001) note that the significant improvement in childhood asthma for both families moving to more affluent neighbourhoods and those moving to locations of their own choice, could be due to characteristics of the structures and particularly the absence of rats – a common asthma trigger – in the new homes and locations: not to classic neighbourhood effects. If reduction in exposure to rats were the cause then getting rid of rats would seem to be a very much more cost-effective policy to achieve the health improvement than mixed communities.
- 12.
This is not to deny the fact that cross sectional data shows significant income mixing in even small neighbourhoods. Hardman and Ioannides (2004) report some two thirds of micro neighbourhoods (consisting of 10 households) contain at least one household with an income in the poorest one sixth of all households: and a half of micro neighbourhoods contain a family in the richest 20% of the income distribution. Krupka (2008) comments that in most US cities well over half the variance in income came from variations within the neighbourhood, as opposed to variation across neighbourhoods. But as he also points out this is still consistent with spatial segregation on the basis of income being the equilibrium outcome. Cities as systems are subject to continuous shocks in terms of their size and the distribution of household incomes and adjustment to such shocks may be slow given the costs of moving house.
- 13.
1987–88 and 1992–94.
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Cheshire, P. (2012). Are Mixed Community Policies Evidence Based? A Review of the Research on Neighbourhood Effects. In: van Ham, M., Manley, D., Bailey, N., Simpson, L., Maclennan, D. (eds) Neighbourhood Effects Research: New Perspectives. Springer, Dordrecht. https://doi.org/10.1007/978-94-007-2309-2_12
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