Regional Infrastructure Effects on the Life Satisfaction of Rural and Urban Residents. A Case Study for Ecuador

Abstract

In developing countries, many households lack basic household services and the provision of utility infrastructure is uneven across regions, leaving lagged regions behind. This lack of infrastructure in specific places can affect the welfare of its inhabitants. This paper aims to measure the influence of household basic services and sub-national infrastructure activities on individual subjective well-being in Ecuador. To determine how important the geographical context is for individual welfare, a hierarchical ordered logistic multilevel model is conducted. The results show that the individual heterogeneity is explained in 7% by the variation across cantons. There are 52 cantons that are above the average life satisfaction and 43 cantons below it. Findings regarding infrastructure evidence that sub-national utility projects and road infrastructure have a positive significant effect on the life satisfaction of rural residents whereas it is not significant for urban residents, indicating the diminishing marginal utility of urban people. Once a satiation point is achieved, marginal utility increases are lower. As for household services, access to the internet has a higher positive welfare effect than access to sewerage and access to water via pipelines.