Study objective: Using a conceptual rather than a mathematical approach, this article proposed a link between multilevel regression analysis (MLRA) and social epidemiological concepts. It has been previously explained that the concept of clustering of individual health status within neighbourhoods is useful for operationalising contextual phenomena in social epidemiology. It has been shown that MLRA permits investigating neighbourhood disparities in health without considering any particular neighbourhood characteristic but only information on the neighbourhood to which each person belongs. This article illustrates how to analyse cross level (neighbourhood-individual) interactions, how to investigate associations between neighbourhood characteristics and individual health, and how to use the concept of clustering when interpreting those associations and geographical differences in health. Design and participants: A MLRA was performed using hypothetical data pertaining to systolic blood pressure (SBP) from 25 000 subjects living in the 39 neighbourhoods of an imaginary city. Associations between individual characteristics (age, body mass index (BMI), use of antihypertensive drug, income) or neighbourhood characteristic (neighbourhood income) and SBP were analysed. Results: About 8% of the individual differences in SBP were located at the neighbourhood level. SBP disparities and clustering of individual SBP within neighbourhoods increased along individual BMI. Neighbourhood low income was associated with increased SBP over and above the effect of individual characteristics, and explained 22% of the neighbourhood differences in SBP among people of normal BMI. This neighbourhood income effect was more intense in overweight people. Conclusions: Measures of variance are relevant to understanding geographical and individual disparities in health, and complement the information conveyed by measures of association between neighbourhood characteristics and health.A n aspect of central importance in social epidemiology is that the health differences between people can partly be attributed to the areas in which they live.1-3 People with similar characteristics who live in different neighbourhoods may have different health statuses because of differing cultural, economic, political, historical, or geographical influences. In other words, different people may to some extent share similar health statuses because they share a common environment. 4 This contextual phenomenon expresses itself as the clustering of individual health status within neighbourhoods. [5][6][7] The presence of clustering is, in turn, the main reason for applying multilevel regression techniques. If the individual health status is correlated within neighbourhoods, analysis using common regression methods underestimates the standard errors for contextual effects and gives biased results. Multilevel regression analysis (MLRA) is a statistical methodology that provides information on how health disparities are distributed between the individual and the neighb...