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Income Inequality and Happiness: Which Inequalities Matter n China?

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  • John Knight
  • Ramani Gunatilaka

Abstract

The effect of inequality on happiness should intrigue social scientists. Of the many dimensions of income inequality, we explore four, analysing a rich data set for China. Does actual or perceived inequality have a greater effect on happiness? We find that perceptions of inequality are the more important. How broad is the reference group with which people compare themselves? They report that it is narrow; and indeed narrowly defined inequality has the greater effect on happiness. Do perceptions of the degree of fairness of inequality matter? They do, as they ameliorate the adverse effect of inequality on happiness, especially for the poorest. Is it self-centred or community-based inequality which affects happiness? Both measures have significant effects, but in opposite directions. The research and policy implications are discussed.

Suggested Citation

  • John Knight & Ramani Gunatilaka, 2021. "Income Inequality and Happiness: Which Inequalities Matter n China?," CSAE Working Paper Series 2021-11, Centre for the Study of African Economies, University of Oxford.
    • Handle: RePEc:csa:wpaper:2021-11
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    Cited by:

    1. Wang, Zheng-Xin & Jv, Yue-Qi, 2023. "Revisiting income inequality among households: New evidence from the Chinese Household Income Project," China Economic Review, Elsevier, vol. 81(C).
    2. John Knight & Ramani Gunatilaka, 2023. "The Quality of Society and Happiness: Fairness, Trust, and Community in China," Economics Series Working Papers 1000, University of Oxford, Department of Economics.
    3. Biswajit Banerjee & Peter Tóth, 2025. "Life Satisfaction and Inequality in Slovakia: The Role of Income, Consumption and Wealth," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 177(1), pages 93-126, March.
    4. Wei, Binhui & Zhao, Chunkai & Luo, Mingzhong, 2024. "Online markets, offline happiness: E-commerce development and subjective well-being in rural China," China Economic Review, Elsevier, vol. 87(C).
    5. Efraín García-Sánchez & Juan Matamoros-Lima & Eva Moreno-Bella & Davide Melita & Ángel Sánchez-Rodríguez & Juan Diego García-Castro & Rosa Rodríguez-Bailón & Guillermo B. Willis, 2024. "Perceived Economic Inequality Is Negatively Associated with Subjective Well-being through Status Anxiety and Social Trust," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 172(1), pages 239-260, March.
    6. Mingzhi Hu & Yuming Yang & Yinxin Su & Xiaofen Yu, 2024. "Broadband Infrastructure and Happiness of Rural Households in China," Journal of Happiness Studies, Springer, vol. 25(6), pages 1-25, August.
    7. Guanghao Wu, 2024. "From Soil to Soul: Agro-Product Geographical Indications and the Subjective Well-Being of Rural Residents," Journal of Happiness Studies, Springer, vol. 25(6), pages 1-25, August.
    8. John Knight & Li Shi & Wan Haiyuan, 2023. "New integrated concepts and measures of income poverty and of 'common prosperity' in China," CSAE Working Paper Series 2023-14, Centre for the Study of African Economies, University of Oxford.
    9. Kundu, Srikanta & Kundu, Ruma & Chettri, Kul Bahadur, 2024. "Asymmetric effects of democracy and macroeconomic factors on happiness under high and low per capita incomes: A threshold panel analysis," Ecological Economics, Elsevier, vol. 216(C).
    10. Boulton, Thomas J., 2023. "Property rights and access to equity capital in China," Global Finance Journal, Elsevier, vol. 55(C).
    11. Qi Zhou & Jun Chen & Shanqing Liu & Fengxiu Zhou & Huwei Wen, 2024. "Pollution Control and Well-Being in Rural Areas: A Study Based on Survey Data," Sustainability, MDPI, vol. 16(3), pages 1-16, February.
    12. Xu, Tao & Zhu, Weiwei, 2021. "Eudemonia and Freedom: A Bibliometric Research on Frontiers and Evolution of Labour and Employment in China," MPRA Paper 112908, University Library of Munich, Germany, revised 30 Mar 2022.
    13. Penghu Zhu & Yingying Hu & Ning Zhang, 2024. "How does civilization promote happiness? Insights from the Civilized Cities Program in China," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 11(1), pages 1-18, December.
    14. Peihua Deng & Ronnie Schöb, 2024. "Group‐specific redistribution, inequality, and subjective well‐being in China," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 70(3), pages 862-882, September.

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    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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