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What does a well-being perspective add to our understanding of poverty?

  • Shams, Khadija

Drawing on unique survey data for rural Pakistan, we investigate the impact of socio-demographic factors on life satisfaction with particular emphasis on subjective well-being measurement to evaluate poverty and its different components. The data elicits information on overall well-being in terms of households’ satisfaction with the current socio-economic status as well as financial well-being regarding satisfaction with the current income or expenditure. We estimate a happiness model to explore to what extent a well-being perspective adds to our understanding of poverty. We find that the well-being approach closely depicts the idea of capability poverty in terms of the level education and health which both matter significantly. Our results moreover suggest that the proposed financial well-being approach is more promising in capturing both income and capability poverty on subjective grounds. This paper’s main contributions are as follows. First, we link the emerging field of happiness economics with development studies. We believe that this paper fills an important gap in the literature and may well inspire a new holistic look at poverty, beyond the conventional dimension of the lack of income. Second, we intend to challenge the view that poverty is best understood from a more macro-level without properly accounting for individuals’ own valuation of their well-being. Since poverty is often linked with human development, or the lack of it, this paper takes a special look at poverty and suggests that income poverty is only part of the picture.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 40132.

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Date of creation: Jan 2012
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Handle: RePEc:pra:mprapa:40132
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  1. Di Tella, Rafael & MacCulloch, Robert J. & Oswald, Andrew J., 2001. "The Macroeconomics of Happiness," The Warwick Economics Research Paper Series (TWERPS) 615, University of Warwick, Department of Economics.
  2. KNIGHT, John & SONG, Lina & GUNATILAKA, Ramani, 2009. "Subjective well-being and its determinants in rural China," China Economic Review, Elsevier, vol. 20(4), pages 635-649, December.
  3. Easterlin, Richard A, 2001. "Income and Happiness: Towards an Unified Theory," Economic Journal, Royal Economic Society, vol. 111(473), pages 465-84, July.
  4. David G. Blanchflower & Andrew J. Oswald, 2000. "Well-Being Over Time in Britain and the USA," NBER Working Papers 7487, National Bureau of Economic Research, Inc.
  5. Alberto Alesina & Rafael Di Tella & Robert MacCulloch, 2001. "Inequality and Happiness: Are Europeans and Americans Different?," NBER Working Papers 8198, National Bureau of Economic Research, Inc.
  6. Bruno S. Frey & Alois Stutzer, 2001. "What Can Economists Learn from Happiness Research?," CESifo Working Paper Series 503, CESifo Group Munich.
  7. Alois Stutzer & Bruno S. Frey, . "Does Marriage Make People Happy, Or Do Happy People Get Married?," IEW - Working Papers 143, Institute for Empirical Research in Economics - University of Zurich.
  8. James Horley & J. Lavery, 1995. "Subjective well-being and age," Social Indicators Research, Springer, vol. 34(2), pages 275-282, February.
  9. Andrew E. Clark & Paul Frijters & Michael A. Shields, 2008. "Relative Income, Happiness, and Utility: An Explanation for the Easterlin Paradox and Other Puzzles," Journal of Economic Literature, American Economic Association, vol. 46(1), pages 95-144, March.
  10. Bruno S. Frey & Alois Stutzer, . "Happiness, Economy and Institutions," IEW - Working Papers 015, Institute for Empirical Research in Economics - University of Zurich.
  11. Luis Angeles, 2009. "Do children make us happier?," Working Papers 2009_10, Business School - Economics, University of Glasgow.
  12. Geeta Gandhi Kingdon & John Knight, 2006. "Subjective well-being poverty vs. Income poverty and capabilities poverty?," Journal of Development Studies, Taylor & Francis Journals, vol. 42(7), pages 1199-1224.
  13. Sen, Amartya, 1983. "Poor, Relatively Speaking," Oxford Economic Papers, Oxford University Press, vol. 35(2), pages 153-69, July.
  14. Easterlin, Richard A., 2006. "Life cycle happiness and its sources: Intersections of psychology, economics, and demography," Journal of Economic Psychology, Elsevier, vol. 27(4), pages 463-482, August.
  15. repec:hal:wpaper:halshs-00590307 is not listed on IDEAS
  16. Andrew E. Clark, 2006. "Born to be mild? Cohort effects don't explain why well-being is U-shaped in age," PSE Working Papers halshs-00590307, HAL.
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