Tips | October 24, 2011

Five tips for choosing where to live

Shall I live close to family? My job? In an expensive area or somewhere more affordable?

It is not only the price of property that matters when choosing where to live. Research may help when trying to find the answers to these tricky questions on choosing where to live.

1. Watch out for … travel time: Economists say commuting can be bad for our happiness. Researchers at the University of Zurich have estimated that the average person who spends 46 minutes a day travelling to and from work would need a pay rise of 19% to be as happy as the average person who doesn't commute. So beware travel time when choosing where to live.

2. Watch out for … wealthy neighbours: Research suggests the power of peer pressure influences a huge amount in our lives – and our neighbours are no different. If people around us spend, we are encouraged to as well, a study on the Dutch postcode lottery suggests.

3. Watch out for … friends and family: Friends and family have been found to make us happy, with academic Nattavudh Powdthavee writing  that, for the average English person, seeing friends or family on most days rather than once or twice a week increases happiness by as much as would a pay rise of £15,000 (€18,000) a year. So living in close proximity to friends or family might pay – emotionally at least.

4. Watch out for … high travel costs: Commuting to work can effectively reduce earnings. Like the eZonomics article on money illusion (that argued inflation and other factors could be used when negotiating a pay rise), so too can the costs of travel. If you are looking to change jobs for one that's better paid, watch out for high travel costs as a lower paid job closer to where you live could in effect give you a higher income. It is of particular note given big spikes in the price of fuel.

5. Watch out for … transport links: Economic studies explore links between unemployment and homeownership. These include Andrew Oswald at the University of Warwick in the 1990s and a 2004 study  from the Netherlands. One explanation is that homeowners find it difficult to move or are reluctant to sell for a job. Good transport links may help, as they can open up a wider area to which homeowners can easily travel to and from work.

eZonomics team
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