Moving to the Best Neighborhood

When you buy or rent a home, you’re choosing more than the home. You get proximity to shops and parks, access to schools, and public services like police and fire protection. Perhaps most importantly, you choose your neighbors.

Our neighbors can affect us in many ways. Neighbors determine local crime, whether grocery stores invest in the area, and how our kids’ peers behave. Economists call these externalities - side effects on us that our neighbors didn’t intend and don’t think much about. As a gross generality, richer neighbors typically help with positive externalities and poorer neighbors can drag us down with negative externalities. That’s why we move to the best neighborhood we can “afford.”

Why do “rich” neighborhoods even exist? Imagine a new city forming around a natural spring, or some other attractive feature. Inhabitant 1 would build her house next to the spring. Inhabitant 2 could build his house a little further from the spring or, if he has money, could buy Inhabitant 1’s house from her (and she would move a little further from the spring). As each successive new person moved to the area, they would buy the closest house to the spring that they could afford. With each new arrival, the inhabitants would re-shuffle, always with the poorest person furthest from the spring and the richest person nearest the spring.

Eventually, the city might provide water, and everybody might forget about the spring. But that wouldn’t stop income sorting. If richer neighbors are desirable (because they provide positive externalities), a new person moving to the town would still locate as close as possible to the spring.

But this is where Jesus starts yelling, “Woe!” The selfish economics of the world only cares about how my neighbors affect me, not how I affect my neighbors. What can my tax dollars buy for the neighbors?

Jesus says, “It is more blessed to give than to receive.” Somewhere else, “Woe to you who are rich, for you have already received your comfort.” God is called “a father to the fatherless, a defender of widows. God sets the lonely in families.”

If we want to drink from Jesus, the spring of living water, perhaps we should locate where he hangs out - in the poorest house at the edge of town, furthest from the world’s spring, where we can help.


Economics is an academic framework that is broadly used to study how (mostly selfish) people interact. In Biblical terms, economists study the ways of “the world.” Jesus responds, “Do not conform to the pattern of this world, but be transformed by the renewing of your mind” (Romans 12:2).

This article is one of several that present simple economic models of how everyday people interact and discuss how Christians could act differently.

Written on August 21, 2020