Residents, academics, and policy makers frequently believe that certain neighbourhood compositions impact on opportunities of those who are exposed to them. Social outcomes such as those connected to employment, levels of education and income and the risk of becoming involved in illegal activity, are frequently seen as influenced by the neighbourhood one is living in. However, isolating the so-called ‘neighbourhood effect’ on social outcomes from other impacts on these outcomes is not trivial. In this chapter we address some of the challenges researchers and policy makers are confronted with when getting involved in ‘neighbourhood effects’ debates. Challenges include conceptual issues related to the types of contexts (residential, work, school) and types of compositions (social or other); questions related to the scales to consider, and how to approach the temporal dimension; issues about what mechanisms would produce the effects; and methodological issues (data types, model choices, sources of bias, detecting thresholds).