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Income, aspirations and the Hedonic Treadmill in a poor society

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  • Knight, John
  • Gunatilaka, Ramani

Abstract

A specially designed household survey for rural China is used to analyse the determinants of aspirations for income, proxied by reported minimum income need, and the determinants of subjective well-being, both satisfaction with life and satisfaction with income. It is found that aspiration income is a positive function of actual income and reference income, and that subjective well-being is raised by actual income but lowered by aspiration income. These findings suggest the existence of a partial ‘Hedonic Treadmill’, and can help to explain why subjective well-being in China appears not to have risen despite rapid economic growth.

Suggested Citation

  • Knight, John & Gunatilaka, Ramani, 2012. "Income, aspirations and the Hedonic Treadmill in a poor society," Journal of Economic Behavior & Organization, Elsevier, vol. 82(1), pages 67-81.
    • Handle: RePEc:eee:jeborg:v:82:y:2012:i:1:p:67-81
    DOI: 10.1016/j.jebo.2011.12.005
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    More about this item

    Keywords

    Adaptation; Aspirations; China; Easterlin paradox; Happiness; Hedonic Treadmill; Subjective well-being;
    All these keywords.

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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