Isolation and Subjective Welfare : Evidence from South Asia

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.

Bibliographic Details

Main Authors:	Fafchamps, Marcel, Shilpi, Forhad
Language:	English
Published:	World Bank, Washington, DC 2008-02
Subjects:	ABSOLUTE VALUE, AGED, AGRICULTURAL OUTPUT, AGRICULTURE, AIR, ARBITRAGE, ASSETS, AVERAGE INCOME, AVERAGE TRAVEL TIME, BUFFER STOCK, CD, CONSUMER GOODS, CONSUMERS, CONSUMPTION EXPENDITURE, CONSUMPTION EXPENDITURES, CONSUMPTION GOODS, CONSUMPTION GROWTH, CONSUMPTION LEVELS, CURRENT CONSUMPTION, DECREASING FUNCTION, DEMAND CURVE, DEMAND FUNCTIONS, DEPENDENT VARIABLE, DEVELOPMENT ECONOMICS, DIFFERENCES IN INCOME, DURABLE GOODS, ECONOMETRIC ANALYSIS, ECONOMETRICS, ECONOMIC DEVELOPMENT, ECONOMIC FACTORS, ECONOMIC GROWTH, ECONOMIC REVIEW, ECONOMIC THEORY, ECONOMIES OF SCALE, EMPIRICAL ANALYSIS, EMPIRICAL EVIDENCE, EMPIRICAL LITERATURE, EMPIRICAL RELATIONSHIP, EXTERNALITIES, GINI COEFFICIENT, HEALTH CARE, HEALTH SERVICES, HOME CARE, HOUSEHOLD CHARACTERISTICS, HOUSEHOLD COMPOSITION, HOUSEHOLD CONSUMPTION, HOUSEHOLD MEMBERS, HOUSEHOLD SIZE, HOUSEHOLD SURVEY, HOUSEHOLDS, HUMAN CAPITAL, INCOME, INCOMES, INDUSTRIALIZATION, INEQUALITY, IRON, ISOLATION, LABOR MARKET, LABOR MARKETS, LEVEL OF CONSUMPTION, LIQUIDITY, LIQUIDITY CONSTRAINTS, MARGINAL PRODUCT, MARGINAL PRODUCTIVITY, MEASUREMENT ERROR, MEASURING POVERTY, MIGRANTS, MIGRATION, MIXED USE, MOBILITY, NEGATIVE COEFFICIENT, NEGATIVE EFFECT, NEGATIVE RELATIONSHIP, NEGATIVE SIGN, NORMAL DISTRIBUTION, 0 HYPOTHESIS, PER CAPITA CONSUMPTION, PERMANENT INCOME, POLICE, POLICY RESEARCH, POLITICAL ECONOMY, POOR AREAS, POOR PEOPLE, POPULATION DENSITY, POSITIVE COEFFICIENT, POVERTY LINE, PREFERENCE FUNCTIONS, PRICE CONTROLS, PRICE DIFFERENTIALS, PSYCHOLOGISTS, PSYCHOLOGY, PUBLIC ECONOMICS, PUBLIC GOODS, QUALITY OF LIFE, REDUCTION IN TRAVEL, REGIONAL DIFFERENCES, REGIONAL DUMMIES, REGRESSION ANALYSIS, REGRESSION RESULTS, RELATIVE EARNINGS, ROAD, ROADS, RURAL ROADS, SIGNIFICANT EFFECT, SIGNIFICANT NEGATIVE, SIGNIFICANT RELATIONSHIP, SOCIAL RESEARCH, SUB-SAHARAN AFRICA, TOTAL CONSUMPTION, TOTAL INCOME, TRANSPORT, TRANSPORT COSTS, TRAVEL DISTANCE, TRAVEL TIME, TRAVEL TIMES, TRUE, UNEMPLOYMENT, UTILITY FUNCTION, UTILITY MAXIMIZATION, VEHICLES, WAGES, WEALTH, WORKERS,
Online Access:	http://documents.worldbank.org/curated/en/2008/02/9036699/isolation-subjective-welfare-evidence-south-asia https://hdl.handle.net/10986/6573
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