Isolation and Subjective Welfare

Marcel Fafchamps () and Forhad Shilpi

No 6001, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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 affect responses to questions about income and consumption adequacy. Results show that isolation significantly reduce subjective assessments of income and consumption adequacy, even after controlling for consumption expenditures and other factors. Part of this effect can be attributed to lower access to public goods and to a reduction in the variety of consumption items. Equivalent variation estimates suggest that the subjective cost of isolation is large but also that the gain from reduced isolation is largest for households already close to markets.

Keywords: consumption adequacy; geographical isolation; subjective well-being (search for similar items in EconPapers)
JEL-codes: D60 I31 R20 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-geo
Date: 2006-12
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Working Paper: Isolation and Subjective Welfare (2004)
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