Does metro proximity promote happiness? Evidence from Shanghai

Although an increasing number of scholars are evaluating rail transit benefits, there have been surprisingly few studies of the links between metro proximity and happiness. The principal objective of this paper is to assess the benefits of metro proximity for individual's happiness. A key challenge to empirically answering this question is the fact that residential location is likely to be the result of self-selection, i.e., personal preference, such that living around a rail station can increase residents' happiness. Taking advantage of the largely exogenous residential locations of those who bought their house 10 years earlier than the operation of their nearest metro station and those households living in non-market housing in Shanghai, we find proximity to a subway station robustly promotes happiness at the individual level. These results suggest that the development of rail transit and transit-oriented development (TOD) are promising ways to increase happiness.