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

Jacob Gerner Hariri, Christian Bjørnskov and Mogens K. Justesen

No 7209, Policy Research Working Paper Series from The World Bank

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.

Keywords: Economic Theory&Research; Debt Markets; Currencies and Exchange Rates; Fiscal&Monetary Policy; Emerging Markets (search for similar items in EconPapers)
Date: 2015-03-10
New Economics Papers: this item is included in nep-hap and nep-ltv
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Citations: View citations in EconPapers (6)

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Journal Article: Economic Shocks and Subjective Well-Being: Evidence from a Quasi-Experiment (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:7209

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