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Subjective Wealth and Satisfaction with Policy Reform: Evidence from the Cotton Reform Experience in Burkina Faso

Subjective Wealth and Satisfaction with Policy Reform: Evidence from the Cotton Reform Experience... This paper examines the relationship between individual changes in objective and subjective welfare in the context of rural development. Taking the case of the cotton reform in Burkina Faso, I study the determinants of the joint distribution of changes in subjective welfare and subjective appreciation of the welfare effects of a policy reform at the household level. A reference-based utility function with personality effects is introduced to explain large increases in experienced subjective welfare with no corresponding increases in consumption and income. Using subjective and objective welfare variables from data collected in cotton areas before and after the cotton reform, several empirical specifications are estimated to explore reference and personality effects at play, while addressing measurement issues related to subjective indicators, i.e. heterogeneity in latent psychological factors. In addition to absolute and relative welfare changes, both the large increase in subjective wealth and the ubiquitous satisfaction with the cotton reform are found to be heterogeneously driven by personality and information effects across income and ethnic groups, which underlies significant but heterogeneous appropriation of the welfare effects and policy content of the cotton reform. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of African Economies Oxford University Press

Subjective Wealth and Satisfaction with Policy Reform: Evidence from the Cotton Reform Experience in Burkina Faso

Kaminski, Jonathan
Journal of African Economies , Volume 23 (4) – Aug 28, 2014
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References (51)

Publisher
Oxford University Press
Copyright
The author 2014. Published by Oxford University Press on behalf of the Centre for the Study of African Economies. All rights reserved. For permissions, please email: journals.permissionsoup.com
ISSN
0963-8024
eISSN
1464-3723
DOI
10.1093/jae/eju006
Publisher site
See Article on Publisher Site

Abstract

This paper examines the relationship between individual changes in objective and subjective welfare in the context of rural development. Taking the case of the cotton reform in Burkina Faso, I study the determinants of the joint distribution of changes in subjective welfare and subjective appreciation of the welfare effects of a policy reform at the household level. A reference-based utility function with personality effects is introduced to explain large increases in experienced subjective welfare with no corresponding increases in consumption and income. Using subjective and objective welfare variables from data collected in cotton areas before and after the cotton reform, several empirical specifications are estimated to explore reference and personality effects at play, while addressing measurement issues related to subjective indicators, i.e. heterogeneity in latent psychological factors. In addition to absolute and relative welfare changes, both the large increase in subjective wealth and the ubiquitous satisfaction with the cotton reform are found to be heterogeneously driven by personality and information effects across income and ethnic groups, which underlies significant but heterogeneous appropriation of the welfare effects and policy content of the cotton reform.

Journal

Journal of African Economies – Oxford University Press

Published: Aug 28, 2014

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