Empowerment and life satisfaction: Evidence from Bangladesh

•We document a positive relationship between empowerment and life satisfaction in rural Bangladesh.•Empowerment is measured using a multidimensional index.•Men and women draw satisfaction from different domains of empowerment.•The findings are robust across household fixed effects and instrumental variable models. In this paper, we examine the relationship between life satisfaction and empowerment in rural Bangladesh. We analyse this relationship across region, religion, gender and income categories using data from the BIHS 2012. This dataset has detailed socio-economic information on co-resident couples and also provides information on the empowerment of individuals within the household. We correct for endogeneity both by including a range of community and household fixed effects to capture the impact of omitted variables as well as by estimating an instrumental variable model in which the average participation rate in community activities is our identifying variable. Our results are robust and indicate a positive relationship between empowerment and life satisfaction. Analysing the sub-components of the empowerment index, we find that women draw less satisfaction from having a say in production decisions and use of borrowed money but gain more satisfaction from membership in groups. The puzzle of “contented women” (i.e. the gender gap in life satisfaction) therefore is partly explained by the fact that men and women differ in the way they draw satisfaction from different domains of empowerment.