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D I S C U S S I O N P A P E R S E R I EIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. We develop a theoretical framework that integrates four distinct channels through which others' income can affect utility: public goods, cost of living, expectations of future income, and direct effects (relative income hypothesis and/or altruism). We empirically estimate the relationship with U.S. well-being and health data from Gallup and geographically-based median-income data for ZIP codes and MSAs. The relationship is proximity-dependent: positive (negative) with ZIP-code (MSA) median income as reference income, suggesting that positive (negative) channels dominate locally (regionally) and reconciling seemingly divergent results from the literature. Additional analyses provide evidence of the importance of the public-goods and cost-of-living channels.JEL Classification: D6, D31, I31