Rates of schizophrenia differ significantly between groups defined at the social level, eg, urban/rural comparisons, neighborhoods, and ethnic minority status. While earlier studies were not able to determine if the social environment influenced the development of schizophrenia (causation) or whether individuals at risk aggregated in adverse social environments (selection), the recent development of multilevel modeling should inform this debate. To date, there are few examples of multilevel analyses in schizophrenia research; however, the small number of studies suggest that there may be a neighborhood social contextual effect that influences rates of schizophrenia and other psychotic disorders. Further research is urgently required to progress our knowledge of how individuals, their genes, and the neighborhoods they live in, interact with each other. Studies need to use well-specified multilevel models, and until then, we should remain cautious in our interpretation of such findings.