The Impact of Food Price Inflation on Subjective Well-being: Evidence From Urban Ethiopia |
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Authors: | Yonas Alem Gunnar Köhlin |
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Affiliation: | 1. Department of Economics, University of Gothenburg, Gothenburg, Sweden 2. Department of Agricultural and Resource Economics, University of California, Berkeley, Berkeley, CA, USA
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Abstract: | The world has experienced dramatic food price inflation in recent years, which sparked social unrest and riots in various developing countries. In this paper, we use a novel approach to measure the impact of food price inflation on subjective well-being of urban households in Ethiopia, a country which exhibited one of the highest rates of food price inflation during 2007–2008. Using an ordered probit regression, we show that being negatively affected by a food price shock reduced subjective well-being of households significantly, although the economy was growing rapidly. We also show that relative standing has a large negative effect on subjective well-being of respondents. The fact that rapid economic growth was accompanied by a decline in citizens’ average reported level of life satisfaction brings its pro-poorness into question. We argue that controlling the rise in food price and ensuring that economic growth trickles down to the average urban citizen would enhance welfare significantly. |
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