Subjective well-being and relative poverty in rural Bangladesh

Abstract

Subjective Well-Being and Relative Poverty in Rural Bangladesh * 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 wellbeing function. JEL Classification:O12, I30, I31

Happiness in Bangladesh: The Role of Religion and Connectedness

“…The wealthiest households (Asset Index 4) are 9.5% more likely to report being very happy relative to the reference group (Asset Index 3) but those in the poorer categories are not significantly less happy. In contrast again to Asadullah and Chaudhury (2012), our findings suggest that relative wealth is more important than absolute wealth. We capture this relativity at the site level with the not unreasonable assumption that this is where wealth comparisons are more likely to be made.…”

“…These dummies help capture wealth inequality at the local community level. The a priori here is that the relatively wealthy will report higher happiness, a finding confirmed by Asadullah and Chaudhury (2012).…”

“…Since the 1990s, the country has made significant progress in reducing poverty and introducing socio-economic improvements (Devine and Wood 2017), and can be described as a global international development success story. Despite this however, levels of reported happiness seem to be declining (Asadullah and Chaudhury 2012). Improved living standards therefore seem to be having an impact upon the wellbeing expectations and demands of its citizens (Diener et al 2013).…”

“…In more qualitative follow-up research, we identified a number of areas where the influence of religion on wellbeing comes to the fore including the structuring of community relations (Devine and White 2013), responsibilities, obligations and expectations around marriage, gender and intergenerational relations (White 2012), and the development of political culture and democracy (Basu et al 2017). Recently Asadullah and Chaudhury (2012) offer a very different argument. Analysing data from 2400 households across 12 districts in Bangladesh, the authors claim that neither religion nor gender had any significant impact on happiness.…”

Subjective well-being in China, 2005–2010: The role of relative income, gender, and location

“…7 Similar evidence is available for two transition economies, Peru and Russia, where relative instead of absolute income differences were found to be more important as determinant of happiness (Graham and Pettinato, 2002). Also see Kingdon and Knight (2007) for South Africa, Carlsson, Gupta and Johansson-Stenman (2009) for India, Ravallion and Lokshin (2010) for Malawi, Asadullah and Chaudhury (2012) for Bangladesh and Guillen-Royo (2011) for Peru. For a review of the international evidence on relative income effects on subjective well-being, see Clark, Frijters and Shields (2008) and Verme (2013).…”