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

Jacob Gerner Hariri; Christian Bjørnskov; Mogens Kamp Justesen

doi:10.1093/wber/lhv004

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

Jacob Gerner Hariri, Christian Bjørnskov, Mogens Kamp Justesen

Department of Economics

2 Citations (Scopus)

813 Downloads (Pure)

Abstract

This article 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 microlevel survey data, which-incidentally-were collected in the days surrounding the devaluation. The chance occurrence of the devaluation during the time of the survey enables us to use pretreatment 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.

Original language	English
Journal	The World Bank Economic Review
Volume	30
Issue number	1
Pages (from-to)	55-77
ISSN	0258-6770
DOIs	https://doi.org/10.1093/wber/lhv004
Publication status	Published - 2016

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title = "Economic Shocks and Subjective Well-Being: Evidence from a Quasi-Experiment",

abstract = "This article 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 microlevel survey data, which-incidentally-were collected in the days surrounding the devaluation. The chance occurrence of the devaluation during the time of the survey enables us to use pretreatment 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.",

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AB - This article 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 microlevel survey data, which-incidentally-were collected in the days surrounding the devaluation. The chance occurrence of the devaluation during the time of the survey enables us to use pretreatment 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.

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

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