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Subjective well-being and relative poverty in rural Bangladesh

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  • Asadullah, Mohammad Niaz
  • Chaudhury, Nazmul

Abstract

This paper revisits the debate over the importance of absolute vs. relative income as a correlate of subjective well-being using data from Bangladesh, one of the poorest countries in the world with high levels of corruption and poor governance. We do so by combining household data with population census and village survey records. Our results show that conditional on own household income, respondents report higher satisfaction levels when they experience an increase in their income over the past years. More importantly, individuals who report their income to be lower than their neighbours in the village also report less satisfaction with life. At the same time, our evidence suggests that relative wealth effect is stronger for the rich. Similarly, in villages with higher inequality, individuals report less satisfaction with life. However, when compared to the effect of absolute income, these effects (i.e. relative income and local inequality) are modest. Amongst other factors, we study the influence of institutional quality. Institutional quality, measured in terms of confidence in police, matters for well-being: it enters with a positive and significant coefficient in the well-being function.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Psychology.

Volume (Year): 33 (2012)
Issue (Month): 5 ()
Pages: 940-950

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Handle: RePEc:eee:joepsy:v:33:y:2012:i:5:p:940-950

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Web page: http://www.elsevier.com/locate/joep

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Keywords: Poverty; Well-being; Institutions; Bangladesh;

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References

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Cited by:
  1. Alem, Yonas, 2014. "Life-Satisfaction in Urban Ethiopia: The Role of Relative Poverty and Unobserved Heterogeneity," Discussion Papers dp-14-04-efd, Resources For the Future.
  2. Susanne Väth & Simone Gobien, 2014. "Life Satisfaction, Contract Farming and Property Rights: Evidence from Ghana," MAGKS Papers on Economics 201415, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  3. Chu-Chia Lin & Tsung-Chi Cheng & Shu-Chen Wang, 2014. "Measuring Subjective Well-Being in Taiwan," Social Indicators Research, Springer, vol. 116(1), pages 17-45, March.
  4. Alem, Yonas, 2013. "Relative Standing and Life-Satisfaction: Does Unobserved Heterogeneity Matter?," Working Papers in Economics 579, University of Gothenburg, Department of Economics.
  5. Susanne Väth & Michael Kirk, 2014. "Do property rights and contract farming matter for rural development? Evidence from a large-scale investment in Ghana," MAGKS Papers on Economics 201416, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

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