Setting is the time and place of the action of the story, including the people, customs and geography.  The story opens in a small town on the coast of Norway.  The action of the story likely takes place in the 19th century, since the play was written in 1882.  The town is small and its economy is largely based on the use of therapeutic public baths.  When the doctor discovers that the baths are contaminated, this is a threat to the town’s economic welfare.  The people in the town are prone to distrust and violence, as we see when they realize what closing the baths will do to the town’s finances.