Regional Disparities in Subjective Well-being: A Spatial Econometric Approach

Discussion Papers

No.766

by Takeshi Aida

March 2020

ABSTRACT

This study aims to explore spatial externalities in subjective well-being (SWB) as sources of regional disparities. Although previous studies have shown positive externalities in SWB, the estimated effect is frequently confounded by unobserved regional heterogeneities, which can be sources of regional disparities. Using a household panel dataset collected in South Africa, the study estimates spatial econometric models with fixed effects to show spatial externalities in SWB by explicitly controlling for unobserved heterogeneities at the individual and regional levels. Estimation results indicate strong spatial dependence on SWB, confirming that spatial externalities within and across geographical clusters are essential factors for explaining regional disparities.

Keywords: subjective well-being, spillover effect, regional disparities, spatial econometrics

JEL classification: I31, R12, C31

Please note that discussion papers are works in various stages of progress and most have not been edited and proofread and may contain errors of fact or judgment. Revised versions of these papers may subsequently appear in more formal publication series. The views expressed in this publication are those of the author(s). The IDE does not guarantee the accuracy of the data included and accepts no responsibility for any consequences arising from its use.