This discussion paper considers whether the areas that people live in influence their life outcomes, and how theories around this impact on social policy decisions. It considers how policy makers have historically used 'area-based' policies with the aim of creating more socially and economically diverse neighbourhoods. It reviews the theory of 'area effects' or 'neighbourhood effects' (the study of the social processes accentuating social disadvantage in particular places), concluding that place does matter, but a broader range of conditions, contexts and social structures are also important factors in life outcomes. Area-based policies therefore need to be carefully and critically considered.

This paper is followed by another, on mixed tenure housing, Does tenure mix work?