Abstract
Using the 2012 China Household Finance Survey, this study finds that happiness in China is positively associated with expenditures on status-related and socially motivated goods, not with spending on improving material well-being or primarily intended for procuring material goods. It also reveals that socially motivated consumption has a status element and the effects of different types of consumption on happiness vary with people’s educational background.
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Notes
In the regression, income and consumption are logged while wealth is in hundreds of thousands of 2011 Chinese yuan. Striving for the maximum number of observations, I use log (reported value + 1) to account for zero income and consumption.
Income, consumption, and happiness are flows while wealth is a stock and changes slowly. Thus, the endogeneity of wealth is arguably less concerning.
In an attempt to validate this interpretation, I also add provincial crime rates to the model and it does not change my conclusion. However, other interpretations of this question are possible.
However, I cannot rule out other interpretations like self-selection. For example, it could be that people who care more about material comfort are more likely to pursue a higher education.
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This study was funded by the California State University, Los Angeles (2017–2018 Minigrant). The author thanks Valentina Diba for research assistance.
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Cui, Z. Happiness and consumption: evidence from China. Int Rev Econ 65, 403–419 (2018). https://doi.org/10.1007/s12232-018-0303-1
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DOI: https://doi.org/10.1007/s12232-018-0303-1