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Economic shocks and subjective well-being : evidence from a quasi-experiment

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  • Hariri,Jacob Gerner
  • Bjørnskov,Christian
  • Justesen,Mogens K.

Abstract

This article examines how economic shocks affect individual well-being in developing countries. Using the case of a sudden and unanticipated currency devaluation in Botswana as a quasi-experiment, the article examines how this monetary shock affects individuals'evaluations of well-being. This is done by using microlevel survey data, which?incidentally?were collected in the days surrounding the devaluation. The chance occurrence of the devaluation during the time of the survey enables us to use pretreatment respondents, surveyed before the devaluation, as approximate counterfactuals for post-treatment respondents, surveyed after the devaluation. Estimates show that the devaluation had a large and significantly negative effect on individuals'evaluations of subjective well-being. These results suggest that macroeconomic shocks, such as unanticipated currency devaluations, may have significant short-term costs in the form of reductions in people's sense of well-being.

Suggested Citation

  • Hariri,Jacob Gerner & Bjørnskov,Christian & Justesen,Mogens K., 2015. "Economic shocks and subjective well-being : evidence from a quasi-experiment," Policy Research Working Paper Series 7209, The World Bank.
  • Handle: RePEc:wbk:wbrwps:7209
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    References listed on IDEAS

    as
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    Cited by:

    1. Sibylle Puntscher & Janette Walde & Gottfried Tappeiner, 2016. "Do methodical traps lead to wrong development strategies for welfare? A multilevel approach considering heterogeneity across industrialized and developing countries," Working Papers 2016-01, Faculty of Economics and Statistics, University of Innsbruck.
    2. Powell-Jackson, Timothy & Pereira, Shreya K. & Dutt, Varun & Tougher, Sarah & Haldar, Kaveri & Kumar, Paresh, 2016. "Cash transfers, maternal depression and emotional well-being: Quasi-experimental evidence from India’s Janani Suraksha Yojana programme," Social Science & Medicine, Elsevier, vol. 162(C), pages 210-218.
    3. Sergei Guriev & Ekaterina Zhuravskaya, 2009. "(Un)happiness in Transition," Journal of Economic Perspectives, American Economic Association, vol. 23(2), pages 143-168, Spring.
    4. repec:taf:applec:v:50:y:2018:i:28:p:3029-3038 is not listed on IDEAS
    5. Emilio Colombo & Valentina Rotondi & Luca Stanca, 2018. "Macroeconomic conditions and well-being: do social interactions matter?," Applied Economics, Taylor & Francis Journals, vol. 50(28), pages 3029-3038, June.

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    Keywords

    Economic Theory&Research; Debt Markets; Currencies and Exchange Rates; Fiscal&Monetary Policy; Emerging Markets;

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