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Relative Income and Happiness in Asia: Evidence from Nationwide Surveys in China, Japan, and Korea

Abstract

This study attempts to examine relative income effects on perceived happiness in three major Asian countries—China, Japan, and Korea—in comparison with the United Sates, on the basis of largely comparable nationwide surveys in these countries. Consistent with the results from previous studies in Western countries, comparisons with an individual’s own income and average income of the reference group are significantly associated with the individual’s perceived happiness in Asia. The associations between relative income and happiness are stronger for individual income than family income in China, while the opposite is true in Japan and Korea. Even after controlling for the subjective assessment of family income or personal class identification within the society as a whole, income comparisons within the reference group matter for assessing happiness, especially when using family income for comparisons. Moreover, relative deprivation within the reference group, which is measured by the Yitzhaki index, is negatively related to happiness, providing more evidence for the validity of the relative income hypothesis.

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Notes

  1. Alesina et al. (2004) used life satisfaction for European countries and happiness for the United States in their Europe-US comparisons of happiness. Blanchflower and Oswald (2004) discussed the similarities of these two measures of subjective well-being.

  2. Some preceding studies have used the region of residence as the reference, and regional blocks were available in each country’s GSS. We did not use them as the reference, however, because they were not comparable with across countries given their different sizes and institutional backgrounds.

  3. To check the robustness of the estimation results, we further divided the respondents by marital status (whether they had a spouse or not) and repeated the same estimations with sixty reference groups. We found that the results remained largely intact. The results are available upon request with the authors.

  4. It is widely understood and we also confirmed that self-rated health is significantly associated with happiness. However, we did not include self-rated health as an explanatory variable, considering the potential two-way causality between happiness and health.

  5. In the GSS, there were no respondents that answered both questions about happiness (life satisfaction) and class identification. Hence, we did not estimate Model 4 for the United States.

  6. The Yitzhaki index for individual i, is calculated as

    \( {\text{Yitzhaki}}\;{\text{index}}_{i} = \frac{1}{N}\sum\limits_{j} {(y_{i} - y_{j} )} \quad \forall y_{j} > y_{i} \),

    where individual j belongs to the same reference group and N is the total number of individuals in that reference group. In our analysis, we calculated this index based on the original (i.e., before log-transformed) value of income, considering its original definition and theoretical relationship with the Gini coefficient (Yitzhaki, 1979).

  7. In Korea, individuals with no individual income were not included in estimations, because only those who were currently working were asked to report their individual income.

  8. The magnitude of the coefficient on the Yitzhaki index for each country can be roughly compared between Tables 5 and 6, because the index is scaled by dividing it by the average family income in Table 5 and by the average individual income in Table 6.

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Acknowledgments

The data for this paper were downloaded from the East Asian Social Survey Data Archive (EASSDA) after obtaining the necessary permission. The East Asian Social Survey (EASS) is based on the Chinese General Social Survey (CGSS), Japanese General Social Survey (JGSS), Korean General Social Survey (KGSS), and Taiwan Social Change Survey (TSCS), and distributed by the EASSDA. We are grateful for the financial support provided by Grant-in-Aid for Scientific Research on Innovative Areas (21119004), Grant-in-Aid for Specially Promoted Research (22000001), and Grant-in-Aid for Scientific Research (B) (21330057) from Japan’s Ministry of Education, Culture, Sports, Science and Technology.

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Oshio, T., Nozaki, K. & Kobayashi, M. Relative Income and Happiness in Asia: Evidence from Nationwide Surveys in China, Japan, and Korea. Soc Indic Res 104, 351–367 (2011). https://doi.org/10.1007/s11205-010-9754-9

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Keywords

  • Happiness
  • Relative income
  • Relative deprivation
  • Asia