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Citation Information

Type Journal Article
Title Subjective welfare, isolation, and rivalry!
Author(s)
Publication (Day/Month/Year) 2005
Abstract
Using household survey data from Nepal, this article uses answers to subjective con(sumption adequacy questions to investigate rival preferences. We find strong evidence that respondents judge the adequacy of their consumption relative to that others in the neighborhood. The effect is robust and large in magnitude, it is not due to inequality aversion, andit is the same for people below and above the neighborhood average. Rivalry is strongest inhousing and health care.We also find that rivalry increases with isolation. We interpret this finding as evidence that, in isolated villages, individuals tend to compare their consumptionlevel to that of neighboring households while in an urban setting, the reference group is morediffuse, leading to attenuation bias. A similar attenuation effect is found among householdswho own a radio, television or telephone. Finally we find that migrant households comparethemselves not only to neighbors but also to households in their district of origi

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