Journal of Happiness Studies

, Volume 17, Issue 2, pp 773–791 | Cite as

Subjective Wellbeing and Income: Empirical Patterns in the Rural Developing World

  • Victoria Reyes-GarcíaEmail author
  • Ronnie Babigumira
  • Aili Pyhälä
  • Sven Wunder
  • Francisco Zorondo-Rodríguez
  • Arild Angelsen
Research Paper


A commonality in the economics of happiness literature is that absolute income matters more for the subjective wellbeing of people at low income levels. In this article, we use a large sample of people in rural areas of developing countries with relatively low income levels to test whether subjective wellbeing an increasing function of absolute income in our sample, and to analyze the existence of adaptation and social comparison effects on subjective wellbeing. Our sample includes 6,973 rural households in 23 countries throughout Asia, Africa, and Latin America. The average total income per adult equivalent in our sample was US$ 1555, whereas levels of subjective wellbeing resembled levels found in previous research using cross-country data. We find that, despite low levels of absolute income, levels of subjective wellbeing of our respondents resemble levels found in previous research using cross-country data. We also find remarkable similarities in many of the determinants of subjective wellbeing previously tested. Our data show that absolute income covariates with subjective wellbeing, but—as for richer samples—the magnitude of the association is lower once we control for adaptation and social comparison. Finally, our results suggest that social comparison has a stronger effect than adaptation in explaining the subjective wellbeing of our sample. Our findings highlight the importance of adaptation and social comparison even at low levels of absolute income.


Basic needs Happiness Life satisfaction Poverty and Environment Network (PEN) Quality of life 



We are grateful for the financial support to the PEN project from CIFOR, ESRC-DFID, and Danida. A. Pyhälä is funded by an ERC grant to V. Reyes-García (Grant agreement n° FP7-261971-LEK). Thanks also go to Resilient Dry Land Systems, ICRISAT-Patancheru for providing office facilities to Reyes-García, and to J. van den Bergh and two anonymous reviewers for comments to a previous version of this article.


  1. Akay, A., & Martinsson, P. (2011). Does relative income matter for the very poor? Evidence from rural Ethiopia. Economics Letters, 110, 213–215.CrossRefGoogle Scholar
  2. Angeles, L. (2010). Adaptation or social comparison? The effects of income on happiness. SIRE discussion papers. Google Scholar
  3. Angelsen, A., Larsen, H., Lund, J., Smith-Hall, C., & Wunder, S. (2012). Measuring livelihoods and environmental dependence: Methods for research and fieldwork. London: Earthscan.Google Scholar
  4. Asadullah, M. N., & Chadhury, N. (2012). Subjective well-being and relative poverty in rural Bangladesh. Journal of Economic Psychology, 33, 940–950.CrossRefGoogle Scholar
  5. Blanchflower, D. G., & Oswald, A. J. (2004). Well-being over time in Britain and the USA. Journal of Public Economics, 88, 1359–1386.CrossRefGoogle Scholar
  6. Burchardt, T. (2005). Are one man’s rags another man’s riches? Identifying adaptive preferences using panel data. Social Indicators Research, 74, 57–102.CrossRefGoogle Scholar
  7. Camfield, L., Guillen-Royo, M., & Velazco, J. (2010). Does needs satisfaction matter for psychological and subjective wellbeing in developing countries: A mixed-methods illustration from Bangladesh and Thailand. Journal of Happiness Studies, 11(4), 497–516. doi: 10.1007/s10902-009-9154-5.CrossRefGoogle Scholar
  8. Carlsson, F., Gupta, G., & Johansson-Stenman, O. (2009). Keeping up with the Vaishyas? Caste and relative standing in India. Oxford Economic Papers- New Series, 61(1), 52–73.CrossRefGoogle Scholar
  9. Clark, A. E., Frijters, P., & Shields, M. A. (2008). Relative income, happiness, and utility: An explanation for the Easterlin paradox and other puzzles. Journal of Economic Literature, 46(1), 95–144.CrossRefGoogle Scholar
  10. Deaton, A. (2008). Income, health, and well-being around the world: Evidence from the Gallup World Poll. Journal of Economic Perspectives, 22(2), 53–72.CrossRefGoogle Scholar
  11. DeNeve, K. M., & Cooper, H. (1998). The happy personality: A meta-analysis of 137 personality traits and subjective well-being. Psychological Bulletin, 124, 197–229.CrossRefGoogle Scholar
  12. Di Tella, R., Haisken-DeNew, J. P., & MacCulloch, R. (2010). Happiness adaptation to income and to status in an individual panel. Journal of Economic Behavior & Organization, 76(3), 834–852.CrossRefGoogle Scholar
  13. Di Tella, R., & MacCulloch, R. (2008). Gross national happiness as an answer to the Easterlin Paradox? Journal of Development Economics, 86, 22–42.CrossRefGoogle Scholar
  14. Diener, E., & Biswas-Diener, R. (2002). Will money increase subjective well-being? Social Indicators Research, 57(2), 119–169.CrossRefGoogle Scholar
  15. Diener, E., & Diener, M. (1995). Crosscultural correlates of life satisfaction and self-esteem. Journal of Personality and Social Psychology, 68, 653–663.CrossRefGoogle Scholar
  16. Diener, E., Lucas, R. E., & Scollon, C. N. (2006). Beyond the hedonic treadmill: Revisions to the adaptation theory of well-being. American Psychologist, 61, 305–314.CrossRefGoogle Scholar
  17. Diener, E., & Oishi, S. (2005). The nonobvious social psychology of happiness. Psychological Inquiry, 16, 162–167.CrossRefGoogle Scholar
  18. Diener, E., Oishi, S., & Lucas, R. E. (2003). Personality, culture, and subjective well-being: Emotional and cognitive evaluations of life. Annual Review of Psychology, 54, 403–425.CrossRefGoogle Scholar
  19. Diener, E., Lucas, R. E., & Oishi, S. (2002). Subjective well-being: The science of happiness and life satisfaction. In C. R. Snyder & S. J. Lopez (Eds.), Handbook of positive psychology (pp. 63–65). Oxford Oxford University Press.Google Scholar
  20. Diener, E., Sandvik, E., Seidlitz, L., & Diener, M. (1993). The relationship between income and subjective well-being: Relative or absolute? Social Indicators Research, 28, 195–223.CrossRefGoogle Scholar
  21. Diener, E., & Seligman, M. E. P. (2004). Beyond money: Toward and economy of well-being. Psychological Science in the Public Interest, 5(1), 1–31.CrossRefGoogle Scholar
  22. Diener, E., Suh, E., Lucas, R. E., & Smith, H. E. (1999). Subjective well-being: Three decades of progress. Psychological Bulletin, 125, 276–302.CrossRefGoogle Scholar
  23. Duesenberry, J. S. (1949). Income saving and the theory of consumer behavior. Cambridge, MA: Harvard University Press.Google Scholar
  24. Easterlin, R. A. (1974). Does economic growth improve the human lot? Some empirical evidence. In P. David & M. Reder (Eds.), Nations and happiness in economic growth: Essays in honor of moses Abramowitz (pp. 89–125). New York: Academic Press.Google Scholar
  25. Easterlin, R. A. (1995). Will raising the incomes of all increase the happiness of all. Journal of Economic Behavior & Organization, 27(1), 35–47.CrossRefGoogle Scholar
  26. Easterlin, R. A. (2003). Explaining happiness. Proceedings of the National Academy of Sciences of the United States of America, 100(19), 11176–11183. doi: 10.1073/pnas.1633144100.CrossRefGoogle Scholar
  27. Easterlin, R. A., McVey, L. A., Switek, M., Sawangfa, O., & Zweig, J. S. (2010). The happiness—income paradox revisited. Proceedings of the National Academy of Sciences of the United States of America, 107(52), 22463–22468. doi: 10.1073/pnas.1015962107.CrossRefGoogle Scholar
  28. Eid, M., & Diener, E. (2001). Norms for experiencing emotions in different cultures: Inter- and intranational differences. Journal of Personality and Social Psychology, 81, 869–885.CrossRefGoogle Scholar
  29. Fafchamps, M., & Kebede, B. (2008). Subjective well-being, disability and adaptation: A case study from rural Ethiopia. In D. Clark (Ed.), Adaptation and wellbeing. Cambridge: Cambridge University Press.Google Scholar
  30. Fafchamps, M., & Shipi, F. (2008). Subjective welfare, isolation, and relative consumption. Journal of Development Economics, 86, 43–60.CrossRefGoogle Scholar
  31. Ferrer-i-Carbonell, A. (2005). Income and well-being: An empirical analysis of the comparison income effect. Journal of Public Economics, 89, 997–1019.CrossRefGoogle Scholar
  32. Ferrer-i-Carbonell, A., & Frijters, P. (2004). How important is methodology for the estimates of the determinants of happiness? Economic Journal, 114, 641–659.CrossRefGoogle Scholar
  33. Frey, B., & Stutzer, A. (2002). Happiness and economics: How the economy and institutions affect well-being. Princeton, NJ: Princeton University Press.Google Scholar
  34. Graham, C., & Pettinato, S. (2002). Happiness and hardship. Opportunities and insecurity in new market economies. Washington, DC: Brookings Institution Press.Google Scholar
  35. Guillen-Royo, M. (2011). Reference consumption and the subjective wellbeing of the poor in Peru. Journal of Economic Psychology, 32, 259–272.CrossRefGoogle Scholar
  36. Helliwell, J. F. (2003). How’s life? Combining individual and national variables to explain subjective well-being 1166. Economic Modelling, 20(2), 331–360.CrossRefGoogle Scholar
  37. Helliwell, J. F., Layard, R., & Sachs, J. D. (2012). The World Happiness Report. Columbia: The Earth Insitute, Columbia University.Google Scholar
  38. Herrera, J., Razafindrakoto, M., & Roubaud, F. (2006). The determinants of subjective poverty: A comparative analysis between Madagascar and Peru. Document de travail DIAL. Paris: Development, Institutions and Analyses the Long Term.Google Scholar
  39. Howell, C. J., Howell, R. T., & Schwabe, K. A. (2006). Does wealth enhance life satisfaction for people who are materially deprived? Exploring the association among the Orang Asli of peninsular Malaysia. Social Indicators Research, 76(3), 499–524.CrossRefGoogle Scholar
  40. Inglehart, R., & Rabier, J. R. (1986). Aspirations adapt to situations—But why are the Belgians so much happier than the French? A cross-cultural analysis of the subjective quality of life. In F. M. Andrews (Ed.), Research on the quality of life. Ann Arbor: Institute for Social Research University of Michigan.Google Scholar
  41. Kahneman, D., & Tversky, A. (1979). Prospect theory: An analysis of decision under risk. Econometrica, 47, 263–291.CrossRefGoogle Scholar
  42. Kawachi, I., Kennedy, B. P., Lochner, S. M., & Prothrow-Stith, D. (1997). Social capital, income inequality, and mortality. American Journal of Public Health, 87, 1491–1498.CrossRefGoogle Scholar
  43. Kingdon, G., & Knight, J. (2006). Subjective well-being poverty vs. income poverty and capabilities poverty? The Journal of Development Studies, 42(7), 1199–1224.CrossRefGoogle Scholar
  44. Knight, J., & Gunatilaka, R. (2012). Income, aspirations and the hedonic treadmill in a poor society. Journal of Economic Behavior & Organization, 82, 67–81.CrossRefGoogle Scholar
  45. Knight, J., Song, L., & Gunatilaka, R. (2006). Subjective well-being and its determinants in rural China. China Economic Review, 20(4), 635–649.CrossRefGoogle Scholar
  46. Knight, J., Song, L., & Gunatilaka, R. (2009). Subjective well-being and its determinants in rural China. China Economic Review, 20, 635–649.CrossRefGoogle Scholar
  47. Kuegler, A. (2009). A curse of comparison: Evidence on reference groups for relative income concern. World Bank policy research. Washington, DC: World Bank.CrossRefGoogle Scholar
  48. Layard, R. (2005). Happiness: Lessons from a new science. New York: Penguin Press.Google Scholar
  49. Linssen, R., van Kempen, L., & Kraaykamp, G. (2011). Subjective well-being in rural India: The curse of conspicuous consumption. Social Indicators Research, 101, 57–72.CrossRefGoogle Scholar
  50. Lucas, R. E., Clark, A. E., Georgellis, Y., & Diener, E. (2003). Re-examining adaptation and the setpoint model of happiness: Reactions to changes in marital status. Journal of Personality and Social Psychology, 84, 527–539.CrossRefGoogle Scholar
  51. Lyubomirsky, S., King, L., & Diener, E. (2005). The benefits of frequent positive affect: Does happiness lead to success? Psychological Bulletin, 131(6), 803–855.CrossRefGoogle Scholar
  52. Marmot, M. G., & Wilkinson, R. G. (Eds.). (1999). Social determinants of health. Oxford: Oxford University Press.Google Scholar
  53. Myers, D. G. (1993). The pursuit of happiness. New York: Avon.Google Scholar
  54. Myers, D. G., & Diener, E. (1995). Who is happy? Psychological Science, 6, 10–19.CrossRefGoogle Scholar
  55. Ravallion, M., & Lokshin, M. (2010). Who cares about relative deprivation? Journal of Economic Behavior & Organization, 73(2), 171–185.CrossRefGoogle Scholar
  56. Selin, H., & Davey, D. (2012). Happiness across cultures: Views of happiness and quality of life in non-western cultures (science across cultures: History and practice). The Netherlands: Springer.Google Scholar
  57. Steel, P., Schmidt, J., & Shultz, J. (2008). Refining the relationship between personality and subjective well-being. Psychological Bulletin, 134, 138–161.CrossRefGoogle Scholar
  58. Stevenson, B., & Wolfers, J., (2008). Economic growth and happiness: Reassessing the Easterlin paradox. Brookings Papers on Economic Activity, (Spring), 1–87.Google Scholar
  59. Subramanian, S. V., Kim, D., & Kawachi, I. (2005). Covariation in the socioeconomic determinants of self rated health and happiness: A multivariate multilevel analysis of individuals and communities in the USA 1150. Journal of Epidemiology and Community Health, 59(8), 664–669.CrossRefGoogle Scholar
  60. Suh, E., Diener, E., & Fujita, F. (1996). Events and subjective well-being: Only recent events matter. Journal of Personality and Social Psychology, 70(5), 1091–1102.CrossRefGoogle Scholar
  61. van den Bergh, J. C. J. M. (2011). Environment versus growth—A criticism of “degrowth” and a plea for “a-growth”. Ecological Economics, 70, 881–890.Google Scholar
  62. Wilkinson, R. G. (1997). Comment: Income, inequality, and social cohesion. American Journal of Public Health, 87(9), 1504–1506.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media Dordrecht 2015

Authors and Affiliations

  • Victoria Reyes-García
    • 1
    Email author
  • Ronnie Babigumira
    • 2
  • Aili Pyhälä
    • 3
  • Sven Wunder
    • 4
  • Francisco Zorondo-Rodríguez
    • 3
  • Arild Angelsen
    • 2
    • 5
  1. 1.ICREA and Environmental Science and Technology InstituteUniversitat Autònoma de BarcelonaBellatera, BarcelonaSpain
  2. 2.School of Economics and BusinessNorwegian University of Life Sciences (UMB)ÅsNorway
  3. 3.Environmental Science and Technology InstituteUniversitat Autònoma de BarcelonaBellatera, BarcelonaSpain
  4. 4.Center for International Forestry Research (CIFOR)Rio de JaneiroBrazil
  5. 5.Center for International Forestry Research (CIFOR)BogorIndonesia

Personalised recommendations