Costs of domestic violence: a life satisfaction approach

Santos, Cristina (2012). Costs of domestic violence: a life satisfaction approach. Open Discussion Papers in Economics 71; Economics Department, The Open University.



This paper uses a life satisfaction approach to estimate the value of domestic violence and it is, as far as we are aware, the only study which estimates the costs of domestic violence using this approach. It draws on a unique data set which collects data on self-reported domestic violence, individual income and subjective well-being for a cross-sectional UK sample. It provides an estimate of the marginal utility of income and of the marginal utility of domestic violence. It discusses and proposes some ways of dealing with the endogeneity of both violence and income in a happiness equation. The cost of domestic violence is calculated as the average increase in income an individual needs in order to be indifferent between a baseline scenario of no violence and a baseline income, and a scenario of violence and added income. This is the compensating variation of domestic violence. Results show that the costs to individuals who have been victims of domestic violence are very substantial, and often represent amounts larger than household annual incomes. These results are in line with previous studies which cost other forms of violence using stated preference methods and places domestic violence as a major factor inhibiting well-being. In terms of social welfare loss, these results accumulate to a share of total GDP which is notoriously high, and much higher than in other studies which provide estimates of social costs of violence. We claim that it is the nature of a satisfaction approach, which accounts for total costs of domestic violence, which lead to such high costs to society. JEL classification: D1, I3, J12, O15

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