This paper focuses on the question of whether it is worse to be poor in a p
oor area or in an area which is more socially mixed; in short, does living
in a deprived area compound the disadvantage experienced by its residents,
and do area effects contribute to social exclusion? The idea of social area
s having direct or mediated effects on the lives of their residents continu
es to interest and challenge academic and policy debates on the effect of c
oncentrated poverty and on the creation of more mixed and, thereby, more su
stainable neighbourhood forms. However, area effects remain contentious and
British research evidence is scant. Following a review of the theoretical
and empirical understandings of the relationship between households and nei
ghbourhoods, the paper presents survey data from a comparative study of dep
rived and socially mixed neighbourhoods in Glasgow and Edinburgh. These dat
a provide evidence that supports the area effects thesis, in particular in
relation to area reputation and employment. The paper concludes that, with
certain caveats, living in areas of geographically concentrated poverty cre
ates additional problems for residents.