Happiness on Tap:

We study the demand for household water connections in urban Morocco, and the effect of such connections on household welfare. In the northern city of Tangiers, among homeowners without a private connection to the city’s water grid, a random subset was offered a simplified procedure to purchase a household connection on credit (at a zero percent interest rate). Take-up was high, at 69%. Because all households in our sample had access to the water grid through free public taps (often located fairly close to their homes), household connections did not lead to any improvement in the quality of the water households consumed; and despite significant increase in the quantity of water consumed, we find no change in the incidence of waterborne illnesses. Nevertheless, we find that households are willing to pay a substantial amount of money to have a private tap at home. Being connected generates important time gains, which are used for leisure and social activities, rather than productive activities. Because water is often a source of tension between households, household connections improve social integration and reduce conflict. Overall, within 6 months, self-reported well-being improved substantially among households in the treatment group, despite the financial cost of the connection. Our results suggest that facilitating access to credit for households to finance lump sum quality-of-life investments can significantly increase welfare, even if those investments do not result in income or health gains. JEL codes: D10, I38, O12 Florencia Devoto, Paris School of Economics and J-PAL: [email protected]; Esther Duflo, MIT and NBER: [email protected]; Pascaline Dupas, Stanford University and NBER: [email protected]; William Pariente, UC Louvain: [email protected]; Vincent Pons, MIT: [email protected].