Crime, life satisfaction and willingness to pay: evidence from Ecuador

Description: This paper aims to study the link between crime and life satisfaction, in Ecuador. I combined crime rate at a canton level, with personal characteristics at an individual level. This study contributes to the literature by using at the same time, Ordered Probit and OLS, which are the most common methods used by similar studies. In addition, it goes one step further by including instrument variables. I showed that crime rates impact negatively on life satisfaction, an effect that is more important when using instruments. Additionally, the positive impact that community satisfaction has on subjective well-being, decreases when crime incidence levels are higher. Similarly, at high levels of community satisfaction, the negative effect that crime has on wellbeing is stronger than at low community satisfaction levels. Finally, it requires up to 17% of the annual relative income ($480) to compensate an individual for a 10% increase on crime in his canton, in order to maintain his life satisfaction at a constant level.

Get full text: http://repositorio.educacionsuperior.gob.ec/handle/28000/2428