Does Piped Water Improve Happiness? A Case from Asian Rural Communities

This study explores whether piped water connection improves people’s happiness. To answer this question, the survey on rural households’ piped water connection situation along with happiness questions was conducted in the rural areas of Cambodia, China, and the Philippines. In these countries, it is common to find areas where some households have access to piped water system while similar households in the same vicinity do not. This allows us to directly test the impact of piped water connection on happiness. The findings of this study firmly suggest that piped water generally increase happiness mainly through convenience and time saving. These benefits are more pronounced in areas with no close substitutes for the connection. Using instrumental ordered probit model to account for endogeneity of the household income variable in the happiness equation, this study estimates the value of piped water connection to be about 30% of annual household income. This study also found that recent experiences, especially bad one, would influence reported global happiness. This finding is consistent with many studies in behavioral economics, which found that people give more attention to changes occurring in loss domain than those occurring in domain of gain. Variables that capture impacts of recent experiences would therefore be necessary in the happiness equation to avoid omitted variables bias.