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Are optimistic expectations keeping the Chinese happy?

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  • Paul Frijters

    ()
    (QUT)

  • Amy Y.C. Liu

    ()
    (ANU)

  • Xin Meng

    ()
    (ANU)

Abstract

In this paper we study the effect of optimistic income expectations on life satisfaction amongst the Chinese population. Using a large scale household survey conducted in 2002 we find that the level of optimism about the future is particularly strong in the countryside and amongst rural-to-urban migrants. The importance of these expectations for life satisfaction is particularly pronounced in the urban areas, though also highly significant for the rural area. If expectations were to reverse from positive to negative, we calculate that this would have doubled the proportion of unhappy people and reduced proportion of very happy people by 48%. We perform several robustness checks to see if the results are driven by variations in precautionary savings or reverse causality.

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Bibliographic Info

Paper provided by National Centre for Econometric Research in its series NCER Working Paper Series with number 37.

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Length: 45
Date of creation: 24 Nov 2008
Date of revision:
Handle: RePEc:qut:auncer:2008-26

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Keywords: Expectations; Happiness; Consumption and Savings; China; Political Economy;

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Cited by:
  1. John Knight, 2012. "The Economic Causes and Consequences of Social Instability in China," Economics Series Working Papers 619, University of Oxford, Department of Economics.
  2. Foster, Gigi & Frijters, Paul & Johnston, David W., 2012. "The triumph of hope over disappointment: A note on the utility value of good health expectations," Journal of Economic Psychology, Elsevier, vol. 33(1), pages 206-214.
  3. 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.

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