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Isolation and subjective welfare : evidence from South Asia

Listed author(s):
  • Fafchamps, Marcel
  • Shilpi, Forhad

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.

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File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2008/02/26/000158349_20080226170950/Rendered/PDF/wps4535.pdf
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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4535.

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Date of creation: 01 Feb 2008
Handle: RePEc:wbk:wbrwps:4535
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  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
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