Economic Shocks and Subjective Well-Being: Evidence from a Quasi-Experiment

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Economic Shocks and Subjective Well-Being: Evidence from a Quasi-Experiment

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Titel: Economic Shocks and Subjective Well-Being: Evidence from a Quasi-Experiment
Forfatter: Hariri, Jacob Gerner; Bjørnskov, Christian; Justesen, Mogens K.
Resume: This paper 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, we examine how this monetary shock affects individuals’ evaluations of well-being. We do so by using micro-level survey data, which – incidentally – was collected in the days surrounding the devaluation. The chance occurrence of the devaluation during the time of the survey enables us to use pre-treatment respondents, surveyed before the devaluation, as approximate counterfactuals for post-treatment respondents, surveyed after the devaluation. Our 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.
URI: http://hdl.handle.net/10398/8892
Dato: 2014-03-03

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