IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Individual well-being in urban China: The role of income expectations

  • Liu, Zhiqiang
  • Shang, Qingyan
Registered author(s):

    Using household survey data, we study the determinants of individual well-being in urban China, emphasizing particularly the role of income expectations. First, we find that individual well-being increases contemporaneously with own income and decreases with community's average income, consistent with findings reported in previous studies. This result holds when we replace income with consumption and when we consider employment and health status of other family members. Second and more important, we find that income expectations have a positive and significant effect on individual well-being. This result is robust to alternative model specifications and to controls for optimistic personality. Instrumental variable estimates and endogeneity tests suggest that the positive relationship between well-being and income expectations is genuine. Our finding has the potential to explain why reported well-being has declined in China despite the spectacular economic growth in the past decades.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://www.sciencedirect.com/science/article/pii/S1043951X12000272
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Article provided by Elsevier in its journal China Economic Review.

    Volume (Year): 23 (2012)
    Issue (Month): 4 ()
    Pages: 833-849

    as
    in new window

    Handle: RePEc:eee:chieco:v:23:y:2012:i:4:p:833-849
    Contact details of provider: Web page: http://www.elsevier.com/locate/chieco

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as in new window
    1. Robert J. MacCulloch & Rafael Di Tella & Andrew J. Oswald, 2001. "Preferences over Inflation and Unemployment: Evidence from Surveys of Happiness," American Economic Review, American Economic Association, vol. 91(1), pages 335-341, March.
    2. David G. Blanchflower & Andrew J. Oswald, 2000. "Well-Being Over Time in Britain and the USA," NBER Working Papers 7487, National Bureau of Economic Research, Inc.
    3. Easterlin, Richard A., 1995. "Will raising the incomes of all increase the happiness of all?," Journal of Economic Behavior & Organization, Elsevier, vol. 27(1), pages 35-47, June.
    4. Di Tella, Rafael & MacCulloch, Robert J. & Oswald, Andrew J., 2001. "The Macroeconomics of Happiness," The Warwick Economics Research Paper Series (TWERPS) 615, University of Warwick, Department of Economics.
    5. John Knight & Ramani Gunatilaka, 2010. "The Rural-Urban Divide in China: Income but Not Happiness?," Journal of Development Studies, Taylor & Francis Journals, vol. 46(3), pages 506-534.
    6. Marcos D. Chamon & Eswar S. Prasad, 2010. "Why Are Saving Rates of Urban Households in China Rising?," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(1), pages 93-130, January.
    7. Luttmer, Erzo F. P., 2004. "Neighbors as Negatives: Relative Earnings and Well-Being," Working Paper Series rwp04-029, Harvard University, John F. Kennedy School of Government.
    8. Lelkes, Orsolya, 2006. "Tasting freedom: Happiness, religion and economic transition," Journal of Economic Behavior & Organization, Elsevier, vol. 59(2), pages 173-194, February.
    9. Song, Lina & Appleton, Simon, 2008. "Life Satisfaction in Urban China: Components and Determinants," MPRA Paper 8347, University Library of Munich, Germany.
    10. Bruno S. Frey & Alois Stutzer, . "What can Economists Learn from Happiness Research?," IEW - Working Papers 080, Institute for Empirical Research in Economics - University of Zurich.
    11. John Knight & Ramani Gunatilaka, 2011. "Does Economic Growth Raise Happiness in China?," Oxford Development Studies, Taylor & Francis Journals, vol. 39(1), pages 1-24.
    12. Easterlin, Richard A., 2009. "Lost in transition: Life satisfaction on the road to capitalism," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 130-145, August.
    13. Konow, James & Earley, Joseph, 2007. "The Hedonistic Paradox: Is Homo Economicus Happier?," MPRA Paper 2728, University Library of Munich, Germany.
    14. Andrew E. Clark & Paul Frijters & Michael A. Shields, 2008. "Relative Income, Happiness, and Utility: An Explanation for the Easterlin Paradox and Other Puzzles," Journal of Economic Literature, American Economic Association, vol. 46(1), pages 95-144, March.
    15. Senik, Claudia, 2006. "Is Man Doomed to Progress?," IZA Discussion Papers 2237, Institute for the Study of Labor (IZA).
    16. Sergei Guriev & Ekaterina Zhuravskaya, 2009. "(Un)happiness in Transition," Journal of Economic Perspectives, American Economic Association, vol. 23(2), pages 143-68, Spring.
    17. Oswald, A.J., 1997. "Happiness and Economic Performance," Papers 18, Centre for Economic Performance & Institute of Economics.
    18. Knight, John & Gunatilaka, Ramani, 2010. "Great Expectations? The Subjective Well-being of Rural-Urban Migrants in China," World Development, Elsevier, vol. 38(1), pages 113-124, January.
    19. Andrew E. Clark and Andrew J. Oswald, . "Satisfaction and Comparison Income," Economics Discussion Papers 419, University of Essex, Department of Economics.
    20. 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.
    21. Rafael Di Tella & Robert MacCulloch, 2006. "Some Uses of Happiness Data in Economics," Journal of Economic Perspectives, American Economic Association, vol. 20(1), pages 25-46, Winter.
    22. Paul Frijters & Ingo Geishecker & John P. Haisken-DeNew & Michael A. Shields, 2006. "Can the Large Swings in Russian Life Satisfaction be Explained by Ups and Downs in Real Incomes?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 108(3), pages 433-458, October.
    23. Oswald, Andrew & Proto, Eugenio & Sgroi, Daniel, 2013. "Happiness and Productivity," CAGE Online Working Paper Series 108, Competitive Advantage in the Global Economy (CAGE).
    24. Alberto Alesina & Rafael Di Tella & Robert MacCulloch, 2001. "Inequality and Happiness: Are Europeans and Americans Different?," Harvard Institute of Economic Research Working Papers 1938, Harvard - Institute of Economic Research.
    25. Bernard M.S. van Praag & Paul Frijters, 1999. "The measurement of welfare and well-being; the Leyden approach," School of Economics and Finance Discussion Papers and Working Papers Series 071a, School of Economics and Finance, Queensland University of Technology.
    26. Song, Lina & Appleton, Simon, 2008. "Life Satisfaction in Urban China: Components and Determinants," IZA Discussion Papers 3443, Institute for the Study of Labor (IZA).
    27. Ada Ferrer-i-Carbonell & Paul Frijters, 2004. "How Important is Methodology for the estimates of the determinants of Happiness?," Economic Journal, Royal Economic Society, vol. 114(497), pages 641-659, 07.
    28. Winkelmann, Liliana & Winkelmann, Rainer, 1998. "Why Are the Unemployed So Unhappy? Evidence from Panel Data," Economica, London School of Economics and Political Science, vol. 65(257), pages 1-15, February.
    29. Loewenstein, George, 1987. "Anticipation and the Valuation of Delayed Consumption," Economic Journal, Royal Economic Society, vol. 97(387), pages 666-84, September.
    30. Liu, Zhiqiang, 2005. "Institution and inequality: the hukou system in China," Journal of Comparative Economics, Elsevier, vol. 33(1), pages 133-157, March.
    31. Konow, James & Earley, Joseph, 2008. "The Hedonistic Paradox: Is homo economicus happier," Journal of Public Economics, Elsevier, vol. 92(1-2), pages 1-33, February.
    32. Ferrer-i-Carbonell, Ada, 2005. "Income and well-being: an empirical analysis of the comparison income effect," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 997-1019, June.
    33. Paul Frijters & John P. Haisken-DeNew & Michael A. Shields, 2004. "Money Does Matter! Evidence from Increasing Real Income and Life Satisfaction in East Germany Following Reunification," American Economic Review, American Economic Association, vol. 94(3), pages 730-740, June.
    34. 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.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:eee:chieco:v:23:y:2012:i:4:p:833-849. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)

    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 references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.