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Does consuming more make you happier? Evidence from Chinese panel data

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  • Wang, Haining
  • Cheng, Zhiming
  • Smyth, Russell

Abstract

This study examines the relationship between consumption and happiness, using panel data from China Family Panel Studies (CFPS). We find that total consumption expenditure has a significant and positive effect on happiness, but we find no evidence of a non-linear relationship between consumption and happiness. There are heterogeneous effects of consumption on happiness across subsamples and for different types of consumption expenditure. We find that relative consumption matters, irrespective if the reference group is de-fined in terms of consumption at the community or county level or on the basis of age, education and gender. However, the extent to which comparison effects are upward looking, or asymmetric, depend on how the comparison group is defined. We also find that comparison with one’s past consumption has no significant effect on an individual’s happiness.

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  • Wang, Haining & Cheng, Zhiming & Smyth, Russell, 2015. "Does consuming more make you happier? Evidence from Chinese panel data," BOFIT Discussion Papers 21/2015, Bank of Finland, Institute for Economies in Transition.
  • Handle: RePEc:bof:bofitp:2015_021
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    Cited by:

    1. Wang, Haining & Cheng, Zhiming & Smyth, Russell, 2016. "Language and consumption," China Economic Review, Elsevier, vol. 40(C), pages 135-151.
    2. repec:spr:soinre:v:132:y:2017:i:1:d:10.1007_s11205-015-1218-9 is not listed on IDEAS

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    JEL classification:

    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • N35 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Asia including Middle East

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