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Wealth, health, and happiness: An inverse story of the Easterlin Paradox in China

Author

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  • Yangjie Wang
  • Lianhua Li
  • Juan Huang
  • Hongjie Qiang

Abstract

One popular explanation for the Easterlin paradox is that income growth over time is usually accompanied by industrialization and pollution, which cause damage to happiness that cannot be reflected by income change. We examine this explanation by exploring the effects of a large-scale environmental regulation program -the “Two Control Zones (TCZ)” Policy- on subjective well-being (SWB) using data from a series of household surveys in China. We find that, the regulation has successfully mitigated air pollution in the implemented area, although at the cost of local income. Overall, the environmental effect dominates the income effect and TCZ policy increases the SWB of affected people. In particular, despite its negative effect on income, by controlling air pollution, the TCZ policy brought a net increase in residential happiness with a money value of ￥59.04 per month in terms of 2009 CNY. This finding supports the environmental explanation of the Easterlin paradox.

Suggested Citation

  • Yangjie Wang & Lianhua Li & Juan Huang & Hongjie Qiang, 2026. "Wealth, health, and happiness: An inverse story of the Easterlin Paradox in China," PLOS ONE, Public Library of Science, vol. 21(3), pages 1-24, March.
    • Handle: RePEc:plo:pone00:0342445
    DOI: 10.1371/journal.pone.0342445
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    3. Zhang, Xin & Zhang, Xiaobo & Chen, Xi, 2017. "Happiness in the air: How does a dirty sky affect mental health and subjective well-being?," Journal of Environmental Economics and Management, Elsevier, vol. 85(C), pages 81-94.
    4. 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.
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