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

TY - UNPB

T1 - Economic Shocks and Subjective Well-Being

T2 - Evidence from a Quasi-Experiment

AU - Hariri, Jacob Gerner

AU - Bjørnskov, Christian

AU - Justesen, Mogens Kamp

N1 - JEL Classification: E50, H0, I31, O23

PY - 2013

Y1 - 2013

N2 - 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.

AB - 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.

KW - Faculty of Social Sciences

KW - Subjective well-being

KW - economic shocks,

KW - currency devaluation

KW - quasi-experiment

M3 - Working paper

BT - Economic Shocks and Subjective Well-Being

PB - SSRN: Social Science Research Network

ER -