Subjective Well-Being and Relative Poverty in Rural Bangladesh

28 Pages Posted: 26 May 2012

See all articles by M. Niaz Asadullah

M. Niaz Asadullah

University of Reading - Department of Economics; University of Malaya

Nazmul Chaudhury

World Bank

Abstract

This paper revisits the debate over the importance of absolute vs. relative income as a correlate of subjective well-being using data from Bangladesh, one of the poorest countries in the world with high levels of corruption and poor governance. We do so by combining household data with population census and village survey records. Our results show that conditional on own household income, respondents report higher satisfaction levels when they experience an increase in their income over the past years. More importantly, individuals who report their income to be lower than their neighbours in the village also report less satisfaction with life. At the same time, our evidence suggests that relative wealth effect is stronger for the rich. Similarly, in villages with higher inequality, individuals report less satisfaction with life. However, when compared to the effect of absolute income, these effects (i.e. relative income and local inequality) are modest. Amongst other factors, we study the influence of institutional quality. Institutional quality, measured in terms of confidence in police, matters for well-being: it enters with a positive and significant coefficient in the well-being function.

Keywords: Bangladesh, institutions, well-being, poverty

JEL Classification: O12, I30, I31

Suggested Citation

Asadullah, Mohammad Niaz and Chaudhury, Nazmul, Subjective Well-Being and Relative Poverty in Rural Bangladesh. IZA Discussion Paper No. 6569, Available at SSRN: https://ssrn.com/abstract=2066992 or http://dx.doi.org/10.2139/ssrn.2066992

Mohammad Niaz Asadullah (Contact Author)

University of Reading - Department of Economics ( email )

Reading, RG6 6AA
United Kingdom

HOME PAGE: http://www.reading.ac.uk/economics/about/staff/m-asadullah.asp

University of Malaya ( email )

Kuala Lumpur, Wilayah Persekutuan
Malaysia

Nazmul Chaudhury

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
74
Abstract Views
563
Rank
576,227
PlumX Metrics