A national household survey for 2002, containing a specially designed module on subjective well-being, is used to estimate pioneering happiness functions in rural China. The variables predicted by economic theory to be important for happiness are relatively unimportant. The analysis suggests that we need to draw on psychology and sociology if we are to understand. Rural China is not a hotbed of dissatisfaction with life, possibly because most people are found to confine their reference groups to the village. Relative income within the village and relative income over time, both in the past and expected in the future, are shown to influence happiness. 'Subjective well-being poverty' functions are estimated, in which income and various proxies for 'capabilities' and 'functionings' appear as arguments. Even amidst the poverty of rural China, social functionings, attitudes and expectations are important to subjective well-being.

This paper may be the first to link the literatures on migration and on subjective well-being in developing countries. It poses the question: why do rural-urban migrant households settled in urban China have an average happiness score lower than that of rural households? Three basic hypotheses are examined: migrants had false expectations about their future urban conditions, or about their future urban aspirations, or about their future selves. Estimated happiness functions and decomposition analyses, based on a 2002 national household survey, indicate that certain features of migrant conditions make for unhappiness, and that their high aspirations in relation to achievement, influenced by reference groups, also make for unhappiness. It is difficult to form unbiased expectations about life in a new and different world.

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Various measures of satisfaction with life or happiness in China appear not to have risen in recent years, despite China's remarkable growth of income per capita. The paper brings together and integrates the results of four papers by the authors to provide a methodologically and substantively innovative explanation for this paradox. The four papers are based on a cross-section national household survey relating to 2002 and containing questions on subjective well-being. Their findings help to explain the time-series evidence: they highlight the importance of relative income, rising urban insecurity, rapid urbanization, and changing reference groups in preventing happiness from rising with income.

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This research is among the first to link the literatures on migration and on subjective well-being in developing countries. It poses the question: why do rural-urban migrant households settled in urban China have an average happiness score lower than that of rural households? It examines the hypothesis that migrants have false expectations because they cannot foresee how their aspirations will adapt to their new situation, and draws on research in both psychology and sociology. Estimated happiness functions and decomposition analyses, based on a 2002 national household survey, suggest that their high aspirations in relation to achievement, influenced by their new reference groups, make for unhappiness. The evidence is consistent with the hypothesis.

Sri Lanka liberalized its economy in 1977, paving the way for more rapid economic growth and higher rates of job creation. But tensions over distributional issues still plague the body politic. This paper investigates the evolution of Sri Lanka's expenditure distribution in the period 1980-2002 and uses three decomposition methodologies-the Fields, the Shapley value decomposition, and Yun's unified method-to determine underlying causes. The study finds that while average adjusted expenditure rose across strata, the rich experienced more rapid expenditure growth leading to greater inequality. Inequality change was driven by differential access to infrastructure, education, and occupation status. Demographic factors, including ethnicity, and spatial factors contributed very little. The study recommends policies that ensure more equitable access to income earning assets such as education and infrastructure services, and that contain the rise in inequality along sectoral, regional, and ethnic fault lines. Copyright 2009 The Authors. Journal compilation International Association for Research in Income and Wealth 2009.