Social Spillovers in Beliefs, Preferences, and Well-being

Abstract

The papers in this dissertation empirically estimate the causal effect of our social environment on our beliefs, preferences, and well-being. I present clear evidence that our decisions are not made in isolation. Rather, our very beliefs and preferences are shaped by our neighbors. Even our happiness may depend on the circumstances of those around us. The first paper reports evidence that neighbors with strong preferences or beliefs around politics, religion, or race are likely to shape our beliefs and preferences. In fact, the migration of individuals with strong preferences appears to be a key determinant of geographic patterns in political outcomes in contemporary America. The second paper shows how social context shapes reports of psychological well-being commonly used in important longitudinal surveys. Individuals understate the symptoms of depression and overstate their happiness when reporting directly to another individual. The final papers tests the relative income hypothesis showing that we are less happy when our neighbors become relatively richer. However, we find no evidence that individuals are averse to increases in income inequality.