Abstract
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.
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Notes
Subjective wellbeing is an umbrella term that includes the various types of evaluation of one's life (self-esteem, joy, fulfillment, etc.). We use the terms happiness, subjective wellbeing, and life satisfaction interchangeably in the text.
We decided to keep in our sample also households who missed one of the four quarters. For households participating in only three of the four quarterly surveys, we calculated the income for the missing quarter as the average of the non-missing quarters adjusted by a trend factor we defined as the ratio of village average for missing quarters to village average for non-missing quarters.
We follow the formula used in World Bank analyses, which is a variant of the OECD scales (Atkinson, Rainwater and Smeeding, 1995): children below 15 years and adults above 65 years get a weight of 0.5, while all other household members (15–65 years) get a weight of 1.
We subtracted the mean income at the site level from the household income, and divided the result by the standard error so that the relative income has a (0,1) distribution.
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Acknowledgments
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.
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Reyes-García, V., Babigumira, R., Pyhälä, A. et al. Subjective Wellbeing and Income: Empirical Patterns in the Rural Developing World. J Happiness Stud 17, 773–791 (2016). https://doi.org/10.1007/s10902-014-9608-2
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DOI: https://doi.org/10.1007/s10902-014-9608-2