Abstract
This paper presents an empirical analysis of the importance of income, relative income, monetary and non-monetary poverty for individual wellbeing or happiness in rural Bangladesh. The study is the first estimate of a wellbeing function for Bangladesh using nationally representative micro-panel data. Employing a linear panel model with individual random effects and a large set of control variables like education, work status and disability, we found a strong and positive relationship between wellbeing and income. Being further below the poverty line—estimated using the depth-of-poverty measure—was found to have a significant negative effect on happiness. On the other hand, the income of the reference group was found to be just as important as one’s own income for an individual’s happiness. Comparisons were found to be asymmetric and upwards. Improvements in a multidimensional poverty index, constructed using indicators of household education, health and living standards, were found to have a positive and significant relationship with happiness in all specifications. Gender-disaggregated analysis reveals that, while the income effect was found to be stronger for male individuals, the effects of relative income, monetary and non-monetary poverty on subjective wellbeing are larger for female individuals. The results thus point towards a need to incorporate such notions into the assessment of individuals’ wellbeing.
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Notes
In this paper, we use the terms ‘subjective wellbeing’, ‘happiness’ and ‘life satisfaction’ interchangeably.
Bangladesh attained lower-middle-income status in 2015. See https://www.worldbank.org/en/country/bangladesh/overview).
We could not calculate the indicator for child mortality, as used in the Global MPI, since it was not collected in the BIHS and we have, thus, replaced it with an indicator for dietary diversity in the household.
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Acknowledgements
The author is most grateful to Dr. Akhter Ahmed at IFPRI for granting early access to the dataset used in this paper. The author would also like to thank the editor and two anonymous reviewers for their useful comments and suggestions. The author acknowledges the financial support from the School of Social Sciences, University of Manchester. All errors and interpretation are the author’s sole responsibility.
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Tauseef, S. Can Money Buy Happiness? Subjective Wellbeing and Its Relationship with Income, Relative Income, Monetary and Non-monetary Poverty in Bangladesh. J Happiness Stud 23, 1073–1098 (2022). https://doi.org/10.1007/s10902-021-00443-9
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DOI: https://doi.org/10.1007/s10902-021-00443-9
Keywords
- Subjective wellbeing
- Income
- Relative income
- Reference group
- Poverty
- Multidimensional poverty index
- Panel data
- Bangladesh