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Subjective welfare, isolation, and relative consumption

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Fafchamps, Marcel
Shilpi, Forhad

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Abstract

The recent literature has shown that subjective welfare depends on relative income. Much of the existing evidence comes from developed economies. What remains unclear is whether this is a universal human trait or an artifact of a prosperous, market-oriented lifestyle. Using data from Nepal, a mountainous country where many households still live in relative isolation, we test whether poorer and more isolated households care less about relative consumption. We find that they do not. We investigate possible reasons for this. We reject that it is due to parental concerns regarding the marriage prospects of their children. But we find evidence in support of the reference point hypothesis put forth by psychologists: household heads having migrated out of their birth district still judge the adequacy of their consumption in comparison with households in their district of origin.

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Article provided by Elsevier in its journal Journal of Development Economics.

Volume (Year): 86 (2008)
Issue (Month): 1 (April)
Pages: 43-60
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Handle: RePEc:eee:deveco:v:86:y:2008:i:1:p:43-60

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Aneel Karnani, 2009. "The Bottom of the Pyramid Strategy for Reducing Poverty: A Failed Promise," Working Papers 80, United Nations, Department of Economics and Social Affairs. [Downloadable!]
  2. Bert G.M. Van Landeghem, 2008. "Human Well-Being over the Life Cycle: Longitudinal Evidence from a 20-Year Panel," LICOS Discussion Papers 21308, LICOS - Centre for Institutions and Economic Performance, K.U.Leuven. [Downloadable!]
  3. Fafchamps, Marcel & Shilpi, Forhad, 2008. "Determinants of choice of migration destination," Policy Research Working Paper Series 4728, The World Bank. [Downloadable!]
  4. Richard P.C. Brown & Eliana V. Jimenez, 2008. "A Mixed-Motives Model of Private Transfers with Subjectively-Assessed Recipient Need: Evidence from a Poor, Transfer-Dependent Economy," Discussion Papers Series 365, School of Economics, University of Queensland, Australia. [Downloadable!]
  5. Chen, Xi & Zhang, Xiaobo, 2009. "Blood for Social Status: Preliminary Evidence from Rural China," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49411, Agricultural and Applied Economics Association. [Downloadable!]
  6. John Knight & Ramani Gunatilaka, 2009. "Is Happiness Infectious?," Economics Series Working Papers 446, University of Oxford, Department of Economics. [Downloadable!]
  7. Akay, Alpaslan & Martinsson, Peter, 2008. "Does Relative Income Matter for the Very Poor? Evidence from Rural Ethiopia," IZA Discussion Papers 3812, Institute for the Study of Labor (IZA). [Downloadable!]
  8. Richard P.C. Brown & Eliana V. Jimenez, 2008. "Remittances and Subjective Welfare in a Mixed-Motives Model: Evidence from Fiji," Discussion Papers Series 370, School of Economics, University of Queensland, Australia. [Downloadable!]
  9. Joe Chen & Yun Jeong Choi & Yasuyuki Sawada, 2008. "How Is Suicide Different in Japan?," CIRJE F-Series CIRJE-F-557, CIRJE, Faculty of Economics, University of Tokyo. [Downloadable!]
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