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2013-04-05 | Peer Reviewed

The Impact of Food Price Inflation on Subjective Well-being: Evidence From Urban Ethiopia

Alem, Yonas and Gunnar Köhlin. 2013. “The Impact of Food Price Inflation on Subjective Well-being: Evidence From Urban Ethiopia.” Social Indicator Research : .
Download reference Doi:10.1007/s11205-013-0318-7

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.