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Isolation and subjective welfare : evidence from South Asia

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  • Fafchamps, Marcel
  • Shilpi, Forhad

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 are associated with responses to questions about income and consumption adequacy. Results show that isolation is associated with a significant reduction in subjective assessments of income and consumption adequacy, even after controlling for consumption expenditures and other factors. The reduction in subjective welfare associated with isolation is much larger for households that are already relatively close to markets. These findings suggest that welfare assessments based on monetary income and consumption may seriously underestimate the subjective welfare cost of isolation, and hence will tend to bias downward the assessment of benefits to isolation-reducing investments such as roads and communication infrastructure.

Suggested Citation

  • Fafchamps, Marcel & Shilpi, Forhad, 2008. "Isolation and subjective welfare : evidence from South Asia," Policy Research Working Paper Series 4535, The World Bank.
  • Handle: RePEc:wbk:wbrwps:4535
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    References listed on IDEAS

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    1. Blanchflower, David G. & Oswald, Andrew J., 2004. "Well-being over time in Britain and the USA," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1359-1386, July.
    2. Smith, Richard J & Blundell, Richard W, 1986. "An Exogeneity Test for a Simultaneous Equation Tobit Model with an Application to Labor Supply," Econometrica, Econometric Society, vol. 54(3), pages 679-685, May.
    3. Rivers, Douglas & Vuong, Quang H., 1988. "Limited information estimators and exogeneity tests for simultaneous probit models," Journal of Econometrics, Elsevier, vol. 39(3), pages 347-366, November.
    4. Gordon B. Dahl, 2002. "Mobility and the Return to Education: Testing a Roy Model with Multiple Markets," Econometrica, Econometric Society, vol. 70(6), pages 2367-2420, November.
    5. Jacoby, Hanan C, 2000. "Access to Markets and the Benefits of Rural Roads," Economic Journal, Royal Economic Society, vol. 110(465), pages 713-737, July.
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    Citations

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    Cited by:

    1. Lagarde, Mylene & Blaauw, Duane, 2014. "Pro-social preferences and self-selection into jobs: Evidence from South African nurses," Journal of Economic Behavior & Organization, Elsevier, vol. 107(PA), pages 136-152.
    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. Asadullah, M. Niaz & Xiao, Saizi & Yeoh, Emile, 2018. "Subjective well-being in China, 2005–2010: The role of relative income, gender, and location," China Economic Review, Elsevier, vol. 48(C), pages 83-101.
    4. Beegle, Kathleen & Himelein, Kristen & Ravallion, Martin, 2012. "Frame-of-reference bias in subjective welfare," Journal of Economic Behavior & Organization, Elsevier, vol. 81(2), pages 556-570.
    5. Fafchamps, Marcel, 2012. "Reprint of development, agglomeration, and the organization of work," Regional Science and Urban Economics, Elsevier, vol. 42(5), pages 765-778.
    6. Bert Van Landeghem & Anneleen Vandeplas, 2016. "Lower in rank, but happier: the complex relationship between status and happiness," LICOS Discussion Papers 38516, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    7. van Landeghem, Bert & Vandeplas, Anneleen, 2017. "The Relationship between Status and Happiness: Evidence from the Caste System in Rural India," IZA Discussion Papers 11099, Institute for the Study of Labor (IZA).
    8. Lagarde, Mylène & Blaauw, Duane, 2014. "Pro-social preferences and self-selection into jobs: Evidence from South African nurses," LSE Research Online Documents on Economics 85229, London School of Economics and Political Science, LSE Library.
    9. Fafchamps, Marcel & Shilpi, Forhad, 2008. "Determinants of choice of migration destination," Policy Research Working Paper Series 4728, The World Bank.
    10. Fafchamps, Marcel, 2012. "Development, agglomeration, and the organization of work," Regional Science and Urban Economics, Elsevier, vol. 42(3), pages 459-472.

    More about this item

    Keywords

    Transport Economics Policy&Planning; Economic Theory&Research; Health Monitoring&Evaluation; Consumption; Inequality;

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