Income, aspirations and the Hedonic Treadmill in a poor society

Knight, John; Gunatilaka, Ramani

doi:10.1016/j.jebo.2011.12.005

“…Perceived family economic position below city average lowers wellbeing. This is consistent with Knight and Gunatilaka (2012) who note that subjective well-being is raised by actual income but lowered by aspiration income. Expected improvement (decline) in personal economic position in the next 10 years positively and significantly (negative and insignificant) affected well-being which is consistent with Tao and Chiu (2009) who found a positive and significant role for upward comparisons in China while the role of downward comparisons is insignificant.…”

Section: Full Sample Analysissupporting

confidence: 91%

Subjective well-being in China, 2005–2010: The role of relative income, gender, and location

Asadullah

¹

,

Xiao

²

,

Yeoh

³

2018

China Economic Review

View full text Add to dashboard Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I EIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. We use data from two rounds of the Chinese General Social Survey (CGSS) to study the determinants of subjective well-being in China over the period 2005-2010 during which selfreported happiness scores show an increase across all income groups. Ordered probit regression analysis of well-being reveals large influence of gender, rural residency and household income. After controlling for demographic attributes, health, unemployment status, household size, agricultural hukou (household registration identity) and education status, household assets, the influence of past and future income and province dummies, we find that women, urban residents and people with higher income are happier in China. More schooling, better health and being employed are positively and significantly correlated with well-being. Sub-sample s reveals that the rich only care about relative income whereas the effect of absolute income dominates in case of the poorer section. The influence of absolute income is larger among women compared to men and in turn explains why women, despite being poorer, are happier in China, conditional on socio-economic differences. On the other hand, rural residents are poorer than urban residents so that conditional on having the same income, there is no rural-urban happiness gap. Our results suggest that while further decline in poverty will enhance well-being in China, policies that reduce rural-urban and gender inequalities are also likely to boost well-being. JEL C...

show abstract

“…That is, individuals' adaptation to consumption, and social comparisons form aspirations. Knight and Gunatilaka (2012) found similar results for rural China.…”

Section: Introductionsupporting

confidence: 64%

“…Another frequently explored dimension refers to income aspirations. For example, Stutzer (2004), and Knight and Gunatilaka (2012) used the income level which people consider sufficient or the bare minimum. Several questions are included in the survey which we use as proxies for these different dimensions of aspirations.…”

Section: Data and Measurementmentioning

confidence: 99%

The causal effect of watching TV on material aspirations: Evidence from the “valley of the innocent”

Hyll

¹

,

Schneider

²

2013

Journal of Economic Behavior & Organization

View full text Add to dashboard Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractThe paper addresses the question of whether TV consumption has an impact on material aspirations. We exploit a natural experiment that took place during the period in which Germany was divided. Owing to geographical reasons, TV programs from the Federal Republic of Germany could not be received in all parts of the German Democratic Republic. Therefore, a natural variation occurred in exposure to West German television. We find robust evidence that watching TV is positively correlated with aspirations. Our identification strategy implies a causal relationship running from TV to aspirations. This conclusion resists various sets of alternative specifications and samples.

show abstract

“…Further, the coefficient estimate of the aspirations and expectations indicators remain statistically significant even after controlling for other internal (psychological) factors 24 including the individual's locus of control, self-esteem, perception on the causes of poverty, openness to change, envy, trust in others, exposure to media and information and travel experience outside the village (columns 2, 4, 6 & 8, Table Aa in the Appendix). Yet, contrary to our findings, Knight and Gunatilaka (2012) in rural China and Stutzer (2004) in Switzerland find some evidence of a "hedonic treadmill", that happiness is positively associated with income but negatively associated with aspirations to income for people adapt their aspirations in response to changes in income. Our interpretation of the findings in this study, however, is that the average per-capita income or wealth among sample households has increased between 2006 and 2014.…”

contrasting

confidence: 99%

Aspirations and Income, Food Security and Subjective Well-Being in Rural Ethiopia

Mekonnen

¹

,

Gerber

²

2016

SSRN Journal

2

0

View full text Add to dashboard Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Taffesse for valuable comments and support during the research work. We also thank Nathalie Francken and her colleagues at KUL for their review that helped improve the paper. Any remaining mistakes and inconsistencies are entirely the responsibility of the authors. Terms of use: Documents in AbstractDespite some improvements in recent years, poverty and food insecurity remain widespread and the main challenges in Ethiopia. Using individual and household level data collected in rural Ethiopia, we examine if aspirations are strongly associated with well-being outcomes, as posited in the aspirations failure framework articulated by Ray (2006) and others. We employ both bivariate and multivariate analyses. We find that aspirations (particularly that of the household head) are indeed strongly associated with the household per-capita income and expenditure and with various triangulating measures of household food (in)security including per-capita calorie consumption, the food consumption score (FCS), the household dietary diversity score (HDDS), and the household food insecurity access scale (HFIAS). Contrary to a few other studies, we also find strong evidence that, in rural Ethiopia, aspirations are positively associated with satisfaction in life and/or happiness. Findings in this study provide suggestive evidence that policies aimed at improving well-being outcomes might benefit from multiple effects (both direct and indirect) if they incorporate aspirations raising strategies.

show abstract

Income, aspirations and the Hedonic Treadmill in a poor society

Cited by 97 publications

References 30 publications

Subjective well-being in China, 2005–2010: The role of relative income, gender, and location

Subjective well-being in China, 2005–2010: The role of relative income, gender, and location

The causal effect of watching TV on material aspirations: Evidence from the “valley of the innocent”

Aspirations and Income, Food Security and Subjective Well-Being in Rural Ethiopia

Contact Info

Product

Resources

About