IDEAS home Printed from https://ideas.repec.org/a/bla/scotjp/v70y2023i2p115-132.html
   My bibliography  Save this article

Optimistic income expectations and meeting those expectations: What matters for well‐being in a developing country?

Author

Listed:
  • Sha Fan
  • Renuka Mahadevan

Abstract

This paper examines the impact of income expectations and the extent to which these expectations are met, on subjective well‐being. For the Indonesian sample, expectations had asymmetric effects on well‐being, with pessimistic expectations having a strong adverse effect compared with a weak positive effect of optimism. Optimism improves only females' and not males' well‐being while pessimism has the reverse effect on both genders' well‐being. Although unmet expectations reduced well‐being for all subgroups, the mediating role of social capital to negate this was limited to some subgroups. Results point toward a gendered policy agenda and the rural–urban divide to improve well‐being.

Suggested Citation

  • Sha Fan & Renuka Mahadevan, 2023. "Optimistic income expectations and meeting those expectations: What matters for well‐being in a developing country?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 70(2), pages 115-132, May.
    • Handle: RePEc:bla:scotjp:v:70:y:2023:i:2:p:115-132
    DOI: 10.1111/sjpe.12332
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/sjpe.12332
    Download Restriction: no
    File URL: https://libkey.io/10.1111/sjpe.12332?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Andries De Grip & Maarten Lindeboom & Raymond Montizaan, 2012. "Shattered Dreams: The Effects of Changing the Pension System Late in the Game," Economic Journal, Royal Economic Society, vol. 122(559), pages 1-25, March.
    2. Markus K. Brunnermeier & Jonathan A. Parker, 2005. "Optimal Expectations," American Economic Review, American Economic Association, vol. 95(4), pages 1092-1118, September.
    3. Carol Graham & Julia Ruiz Pozuelo, 2017. "Happiness, stress, and age: how the U curve varies across people and places," Journal of Population Economics, Springer;European Society for Population Economics, vol. 30(1), pages 225-264, January.
    4. Frijters, Paul & Liu, Amy Y.C. & Meng, Xin, 2012. "Are optimistic expectations keeping the Chinese happy?," Journal of Economic Behavior & Organization, Elsevier, vol. 81(1), pages 159-171.
    5. Das, Marcel & van Soest, Arthur, 1999. "A panel data model for subjective information on household income growth," Journal of Economic Behavior & Organization, Elsevier, vol. 40(4), pages 409-426, December.
    6. Levinson, Arik, 2012. "Valuing public goods using happiness data: The case of air quality," Journal of Public Economics, Elsevier, vol. 96(9-10), pages 869-880.
    7. Jacobsen, Ben & Lee, John B. & Marquering, Wessel & Zhang, Cherry Y., 2014. "Gender differences in optimism and asset allocation," Journal of Economic Behavior & Organization, Elsevier, vol. 107(PB), pages 630-651.
    8. Conchita D’Ambrosio & Joachim Frick, 2007. "Income Satisfaction and Relative Deprivation: An Empirical Link," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 81(3), pages 497-519, May.
    9. Mookerjee, Rajen & Kalipioni, Paul, 2010. "Availability of financial services and income inequality: The evidence from many countries," Emerging Markets Review, Elsevier, vol. 11(4), pages 404-408, December.
    10. Senik, Claudia, 2008. "Is man doomed to progress?," Journal of Economic Behavior & Organization, Elsevier, vol. 68(1), pages 140-152, October.
    11. Deaton, Angus, 2018. "What do self-reports of wellbeing say about life-cycle theory and policy?," Journal of Public Economics, Elsevier, vol. 162(C), pages 18-25.
    12. John Knight & Ramani Gunatilaka, 2017. "Is Happiness Infectious?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 64(1), pages 1-24, February.
    13. Blanchflower, David G., 2020. "Unhappiness and age," Journal of Economic Behavior & Organization, Elsevier, vol. 176(C), pages 461-488.
    14. Bruno S. Frey & Alois Stutzer, 2002. "What Can Economists Learn from Happiness Research?," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 402-435, June.
    15. Schwandt, Hannes, 2016. "Unmet aspirations as an explanation for the age U-shape in wellbeing," Journal of Economic Behavior & Organization, Elsevier, vol. 122(C), pages 75-87.
    16. Easterlin, Richard A, 2001. "Income and Happiness: Towards an Unified Theory," Economic Journal, Royal Economic Society, vol. 111(473), pages 465-484, July.
    17. Terence C. Cheng & Nattavudh Powdthavee & Andrew J. Oswald, 2017. "Longitudinal Evidence for a Midlife Nadir in Human Well‐being: Results from Four Data Sets," Economic Journal, Royal Economic Society, vol. 127(599), pages 126-142, February.
    18. Stutzer, Alois, 2004. "The role of income aspirations in individual happiness," Journal of Economic Behavior & Organization, Elsevier, vol. 54(1), pages 89-109, May.
    19. Mai, Tung & Mahadevan, Renuka, 2016. "A research note on the poverty dynamics and cost of poverty inequality: Case study of Indonesia," Economic Analysis and Policy, Elsevier, vol. 49(C), pages 100-107.
    20. Sujarwoto Sujarwoto & Gindo Tampubolon, 2015. "Decentralisation and Citizen Happiness: A Multilevel Analysis of Self-rated Happiness in Indonesia," Journal of Happiness Studies, Springer, vol. 16(2), pages 455-475, April.
    21. Asena Caner, 2015. "Happiness, Comparison Effects, and Expectations in Turkey," Journal of Happiness Studies, Springer, vol. 16(5), pages 1323-1345, October.
    22. Hilke Brockmann & Jan Delhey & Christian Welzel & Hao Yuan, 2009. "The China Puzzle: Falling Happiness in a Rising Economy," Journal of Happiness Studies, Springer, vol. 10(4), pages 387-405, August.
    23. Kitae Sohn, 2016. "Height and Happiness in a Developing Country," Journal of Happiness Studies, Springer, vol. 17(1), pages 1-23, February.
    24. Liu, Zhiqiang & Shang, Qingyan, 2012. "Individual well-being in urban China: The role of income expectations," China Economic Review, Elsevier, vol. 23(4), pages 833-849.
    25. Wenshu Gao & Russell Smyth, 2011. "What keeps China's migrant workers going? Expectations and happiness among China's floating population," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 16(2), pages 163-182.
    26. Erzo F. P. Luttmer, 2005. "Neighbors as Negatives: Relative Earnings and Well-Being," The Quarterly Journal of Economics, Oxford University Press, vol. 120(3), pages 963-1002.
    27. Lawrence, Elizabeth M. & Rogers, Richard G. & Wadsworth, Tim, 2015. "Happiness and longevity in the United States," Social Science & Medicine, Elsevier, vol. 145(C), pages 115-119.
    28. Briana L. Robustelli & Mark A. Whisman, 2018. "Gratitude and Life Satisfaction in the United States and Japan," Journal of Happiness Studies, Springer, vol. 19(1), pages 41-55, January.
    29. Loomes, Graham & Sugden, Robert, 1982. "Regret Theory: An Alternative Theory of Rational Choice under Uncertainty," Economic Journal, Royal Economic Society, vol. 92(368), pages 805-824, December.
    30. Leonardo Becchetti & Giovanni Trovato & David Andres Londono Bedoya, 2011. "Income, relational goods and happiness," Applied Economics, Taylor & Francis Journals, vol. 43(3), pages 273-290.
    31. Marco Bertoni & Luca Corazzini, 2018. "Asymmetric affective forecasting errors and their correlation with subjective well-being," PLOS ONE, Public Library of Science, vol. 13(3), pages 1-22, March.
    32. Senik, Claudia, 2004. "When information dominates comparison: Learning from Russian subjective panel data," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 2099-2123, August.
    33. Tali Sharot & Alison M. Riccardi & Candace M. Raio & Elizabeth A. Phelps, 2007. "Neural mechanisms mediating optimism bias," Nature, Nature, vol. 450(7166), pages 102-105, November.
    34. Hock-Eam Lim & Daigee Shaw & Pei-Shan Liao & Hongbo Duan, 2020. "The Effects of Income on Happiness in East and South Asia: Societal Values Matter?," Journal of Happiness Studies, Springer, vol. 21(2), pages 391-415, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marta Barazzetta, 2015. "The asymmetric effect of expectations on subjective well-being," Working Papers 374, ECINEQ, Society for the Study of Economic Inequality.
    2. Frijters, Paul & Liu, Amy Y.C. & Meng, Xin, 2012. "Are optimistic expectations keeping the Chinese happy?," Journal of Economic Behavior & Organization, Elsevier, vol. 81(1), pages 159-171.
    3. Senik, Claudia, 2009. "Direct evidence on income comparisons and their welfare effects," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 408-424, October.
    4. Cai, Shu & Park, Albert, 2016. "Permanent income and subjective well-being," Journal of Economic Behavior & Organization, Elsevier, vol. 130(C), pages 298-319.
    5. Emma Pleeging & Martijn Burger & Job Exel, 2021. "Hope Mediates the Relation between Income and Subjective Well-Being," Journal of Happiness Studies, Springer, vol. 22(5), pages 2075-2102, June.
    6. Asena Caner, 2015. "Happiness, Comparison Effects, and Expectations in Turkey," Journal of Happiness Studies, Springer, vol. 16(5), pages 1323-1345, October.
    7. Marco Bertoni & Luca Corazzini, 2015. "Life Satisfaction and Endogenous Aspirations," SOEPpapers on Multidisciplinary Panel Data Research 761, DIW Berlin, The German Socio-Economic Panel (SOEP).
    8. Marco Bertoni & Luca Corazzini, 2018. "Asymmetric affective forecasting errors and their correlation with subjective well-being," PLOS ONE, Public Library of Science, vol. 13(3), pages 1-22, March.
    9. Qianping Ren & Maoliang Ye, 2017. "Donations Make People Happier: Evidence from the Wenchuan Earthquake," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 132(1), pages 517-536, May.
    10. Oswald, Andrew J. & Powdthavee, Nattavudh, 2008. "Does happiness adapt? A longitudinal study of disability with implications for economists and judges," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1061-1077, June.
    11. Zhifang Su & Jr‐Tsung Huang & Arthur Jin Lin, 2021. "House price expectations, mortgages, and subjective well‐being in urban China," Journal of Consumer Affairs, Wiley Blackwell, vol. 55(4), pages 1540-1562, December.
    12. Andrew E. Clark & Claudia Senik, 2010. "Will GDP growth increase happiness in developing countries?," PSE Working Papers halshs-00564985, HAL.
    13. Fulvio Castellacci & Henrik Schwabe, 2020. "Internet, unmet aspirations and the U-shape of life," PLOS ONE, Public Library of Science, vol. 15(6), pages 1-22, June.
    14. Elena Bárcena-Martín & Cortés Aguilar Alexandra & Ana I. Moro Egido, 2013. "The role of proximity and social comparisons on subjective well-being," ThE Papers 13/10, Department of Economic Theory and Economic History of the University of Granada..
    15. McBride, Michael, 2010. "Money, happiness, and aspirations: An experimental study," Journal of Economic Behavior & Organization, Elsevier, vol. 74(3), pages 262-276, June.
    16. Di Tella, Rafael & Haisken-De New, John & MacCulloch, Robert, 2010. "Happiness adaptation to income and to status in an individual panel," Journal of Economic Behavior & Organization, Elsevier, vol. 76(3), pages 834-852, December.
    17. Simon Luechinger, 2009. "Valuing Air Quality Using the Life Satisfaction Approach," Economic Journal, Royal Economic Society, vol. 119(536), pages 482-515, March.
    18. Qian Li & Xiaoguang Huang & Hanwen Zhang, 2023. "Exploring the Effects of Consumption Expenditures on Life Satisfaction in China," Journal of Happiness Studies, Springer, vol. 24(6), pages 1963-1990, August.
    19. Zeynep B. Ugur, 2021. "Does Money Buy Happiness in Turkey?," Applied Research in Quality of Life, Springer;International Society for Quality-of-Life Studies, vol. 16(3), pages 1073-1096, June.
    20. Asena Caner, 2016. "Happiness and Life Satisfaction in Turkey in Recent Years," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 127(1), pages 361-399, May.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:scotjp:v:70:y:2023:i:2:p:115-132. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/sesssea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.