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Isolation and Subjective Welfare

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  • Marcel Fafchamps
  • Forhad Shilpi

Abstract

Using detailed geographical and household survey data from Nepal, this article investigates the relationship between isolation and subjective welfare. This is achieved by examining how distance to markets and proximity to large urban centers affect responses to questions about income and consumption adequacy. Controlling for migration, results show that isolation significantly reduce subjective assessments of income and consumption adequacy. Part of this effect can be attributed to lower access to public goods and to a reduction in the variety of consumption items. Compensating variation estimates suggest that the subjective cost of isolation is large. We also find strong evidence that Nepalese households cannot relocate costlessly out of their village of origin.

Suggested Citation

  • Marcel Fafchamps & Forhad Shilpi, 2004. "Isolation and Subjective Welfare," Economics Series Working Papers 216, University of Oxford, Department of Economics.
  • Handle: RePEc:oxf:wpaper:216
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    Cited by:

    1. Marcel Fafchamps & Forhad Shilpi, 2013. "Determinants of the Choice of Migration Destination," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 75(3), pages 388-409, June.
    2. Asadullah, Mohammad Niaz & Chaudhury, Nazmul, 2012. "Subjective well-being and relative poverty in rural Bangladesh," Journal of Economic Psychology, Elsevier, vol. 33(5), pages 940-950.
    3. Charles Kenny, 2011. "Bentham from the Crypt Once More: Politicians in Pursuit of Happiness," Working Papers id:4332, eSocialSciences.
    4. Fafchamps, Marcel & Shilpi, Forhad, 2008. "Subjective welfare, isolation, and relative consumption," Journal of Development Economics, Elsevier, vol. 86(1), pages 43-60, April.
    5. Guillen-Royo, Monica, 2011. "Reference group consumption and the subjective wellbeing of the poor in Peru," Journal of Economic Psychology, Elsevier, vol. 32(2), pages 259-272, March.
    6. Francken, Nathalie & Minten, Bart & Swinnen, Johan F.M., 2009. "Media, Monitoring, and Capture of Public Funds: Evidence from Madagascar," World Development, Elsevier, vol. 37(1), pages 242-255, January.

    More about this item

    Keywords

    Geographical Isolation; Subjective Well-Being; Migration;

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General

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