We introduce a Bayesian instrumental variable procedure with spatial random effects that handles endogeneity, and spatial dependence with unobserved heterogeneity. We find through a limited Monte Carlo experiment that our proposal works well in terms of point estimates and prediction. Then, we...

The paper consists of a discussion on the relevance of non-income drivers of welfare. This discussion is based on a subjective Bayesian reasoning, where welfare perceptions are subjectively rational decisions of individuals, who are, as author suggests, the ultimate decision-makers in respect of...