In this paper, we review and comment upon the development of the literature on diversity, innovation, and entrepreneurship. In an overview of previous studies and various strands of literatures, we outline and argue that to better understand the intricate dynamic relationships between diversity, innovation, entrepreneurship, and regional development there is a strong need to further develop "the economics of spatial diversity." We further argue that this development may benefit from combining various literatures based upon sound economic micro-foundations, to develop a more absolute understanding of diversity and fulfill the need of more clear mechanisms for future empirical testing. Obviously, this is important both from a research point of view and in order to provide policymakers with a powerful set of analytical tools. We call for more analytical work and more high-quality empirical studies. With a set of papers, we believe this special issue to provide a contribution in this direction.

This paper examines whether subjective life-satisfaction is most strongly related to absolute or relative income in terms of either proximal neighbors or a wider aggregated region. The analysis utilizes two unique datasets - survey data on happiness in combination with finelevel income data for postal codes and municipalities. We find a significant relationship between happiness and both personal income and relative income position among nearby neighbors and more remote neighbors. Hence, being rich as well as being richer than others in the area increases the likelihood of being more satisfied with life. Above all, we find individuals’ level of life-satisfaction to be more strongly related to the income of people in the larger municipality than to the income of nearby neighbors.