In this study, we investigate the implication of electricity access on people’s happiness in developing economies with Indonesia as a case study.Īmong developing nations, Indonesia is the fourth most populated country in the world and the largest economy in Southeast Asia that tries to increase access to modern energy for the whole nation (Dartanto et al., 2020). However, equal and reliable access to energy with no exception to electricity, remains a major challenge for many, if not all, developing countries in the world (Sustainable Energy for All, 2020). It justifies the placed-based policy strategy by the government in developing countries for expanding electricity access in favour of disadvantaged areas.Įnergy is an essential element of individuals’ daily activities and is closely related to many development outcomes, including wellbeing. The heterogeneity analysis shows that the impact of electricity access on happiness is more prominent in the lagging region. We also show that the mechanism in which the effect operates is through individuals’ satisfaction with housing conditions. Unlike the phenomena known as the energy-happiness paradox found mainly in the developed countries that suggest the null relationship between having energy access and people’s happiness, our finding reveals a positive effect of electricity access on people’s happiness.
The model utilised a newly available national-level household survey on life satisfaction and historical data on digital maps of Indonesia’s electricity infrastructure conditions in 1985.
We employed an instrumental variable technique to obviate conventional bias in the happiness regression. We used Indonesia as a case study, a unique archipelagic country with sparse subnational energy infrastructure, leading to the persistent regional energy access gap. This study revisits the energy-happiness paradox hypothesis using the context of a developing nation.
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