Resolution of the Happiness–Income Paradox

It is widely believed that happiness is strongly correlated with wealth and income, but according to the happiness–income paradox, this is not always true. The paradox predicates that there is a strong positive correlation between income and happiness nationally, but the correlation is essentially absent in international comparisons, or in a long-term longitudinal comparison. This paradox has been widely debated among economists and the controversy has persisted for several decades. In this article, the happiness–income paradox is explained in terms of ecological correlation due to spatial aggregation or data-grouping, change of reference classes, and confounding variables. The controversy is resolved when ecological correlations and third-variable effects are accounted for. At the individual level, happiness and income are correlated positively, but not as strongly as many believe. In international comparisons, happiness and income are, in general, quite strongly correlated as well, contrary to what Easterlin (Nations and households in economic growth: essays in honor of Moses Abramovitz, Academic Press, New York, 1974) claimed and similar to what others have found, but for different reasons. Long-term comparison is also related to ecological correlation, but it is related to the change of reference classes as well.     

Religiousness and Subjective Well-Being Among Israeli-Palestinian College Students: Direct or Mediated Links?

Espousing a positive psychology orientation, this study aimed to explore the links between religiousness and subjective well-being, and test whether social support and self-control mediate the expected associations between these two variables. Participants were 264 Israeli-Palestinian college students, who were asked to provide demographic information and complete measures of religiousness, social support, self-control, subjective happiness, positive emotions and negative emotions. We found that religiousness was positively correlated with both subjective happiness and positive emotions, but no significant correlation was found between religiousness and negative emotions. Both social support and self-control partially mediated the links between religiousness and both subjective happiness and positive emotions. The findings of the study, as well as its implications and limitations, are discussed.     

Exploring the Myth of Unhappiness in Former Communist Countries: The Roles of the Sex Gap in Life Expectancy and the Marital Status Composition

National average happiness and the difference in happiness between women and men are positively correlated in European countries. This study focuses on this cross-country relationship and tests (1) whether, after controlling for socio-economic factors, the correlation is attributed to their direct relationship, or, alternatively, explained by the sex difference in life expectancy, and (2) whether the correlation is not only exogenously explained but also endogenously generated by the sex difference in life expectancy. Performing regression analyses, this study shows that the correlation between happiness and its sex difference is spurious, and that the sex difference in life expectancy generates this correlation and accounts for about one-third of the correlation. A decline in happiness influences men’s mortality more than women’s, and widens the life expectancy gap between women and men. This in turn raises the widowhood ratio among women, lowers women’s average happiness, and reduces the happiness gap between women and men. The results obtained in this study points to the importance of controlling for the demographic composition of the population when we use aggregate happiness measures as national happiness indicators.     

Economic Theory and Subjective Well-being: Mexico

Several studies have been conducted on the topic of well-being. Most of them, however, have been done in industrialized countries where income is distributed relatively more equitatively and the population tends to be more homogeneous. This paper studies the relationship between subjective and economic well-being in Mexico, a country where the economic differences among the population are more clearly marked.

According to the economic definition of well-being, higher levels of income are associated with higher levels of well-being through greater levels of material consumption. Taking into consideration this definition, it is worth asking just how important income is for an individual's happiness?Existing studies in psychology have found a positive correlation between economic well-being (socioeconomic status) and subjective well-being (happiness). However, this positive relationship is weak and a large percentage of human happiness remains unexplained.

Although the mentioned studies make a good approximation of the existing relationship between income and happiness, the characteristics or specification of the function that generates the relationship between these two variables is often assumed to be linear and positive. The main objective of this paper is to investigate further the relationship between subjective and economic well-being. In this study different specifications and approaches are used to approximate the relationship between these variables.

An empirical analysis is made from the results of a survey conducted in two Mexican cities. The investigation studies the impact of demographic, social, and economic variables on subjective well-being in Mexico. Several hypotheses are tested to identify the relationship between household income and individual well-being. It is found that income does not have a strong influence on neither well-being nor on the probability of happiness. However, people tend to overstress the impact that additional income would have on their subjective well-being. This fact could explain the importance that people place on increasing their income level, and it could possibly explain the relative sense of dissatisfaction once a higher income level is achieved.

The relationship between income and the sense of basic need satisfaction is also explored. A main assumption in economic theory suggests the existence of a direct relationship between these variables; however, empirical results show this relationship to be extremely weak. Results indicate that subjective well-being is positively related to the sense of basic need satisfaction but not to income.

     

The wealth of nations revisited: Income and quality of life

Does economic prosperity enhance the quality of human life? Across 101 nations, 32 indices were analyzed that reflect a representative sample of universal human values (e.g., happiness, social order, and social justice). Wealth correlated significantly with 26 of the 32 indices, indicating a higher QOL in wealthier nations. Only suicide and CO₂ emissions were worse in wealthier societies. Basic physical needs were met early in economic development, whereas advanced scientific work occurred only when basic physical needs were fulfilled for almost all people in the society. Limitations of the conclusions are discussed.     

Happiness and Childbearing Across Europe

Using happiness as a well-being measure and comparative data from the European social survey we focus in this paper on the link between happiness and childbearing across European countries. The analysis motivates from the recent lows in fertility in many European countries and that economic wellbeing measures are problematic when considering childbearing. We find significant country differences, though the direct association between happiness and childbearing is modest. However, partnership status plays an important role for both men and women. Working fathers are always happier, whereas working mothers are not, though mothers?? happiness tends to increase with household income.     

Does Individual Secularism Promote Life Satisfaction? The Moderating Role of Societal Development

This study was designed to examine the link between values and life satisfaction, examining the role of culture in this process. Secularism was found to predict life satisfaction scores at a small but statistically very significant level in persons from all nations participating in all four waves of the World Values Survey. The direction and strength of this relationship was moderated, however, by the country’s human development index—people in low-HDI countries consistently showed a negative relationship between secularism and happiness across the four waves of the WVS; people in high-HDI countries initially showed a negative relationship between secularism and happiness in Waves 1 and 2, but a positive relationship between secularism and happiness in Waves 3 and 4. These results thus appear to support a “cultural fit” hypothesis consistently for persons in low HDI countries, and a transition towards a “cultural fit” for persons in HDI countries as data was collected across the four waves. By Wave 4, it is clear that citizens who endorse values consistent with their county’s developmental trajectory are more satisfied with their lives. This study demonstrates the amenability of the data collected by the World Values Survey to individual-level analysis of psychological process that is responsive to the shaping influence of variations in their nation’s societal characteristics.     

Prosperity-Enhancing Institutions: Towards a Comprehensive Composite Index

Institutions that potentially have a positive impact on economic performance rarely exist outside of a system of institutions; rather they are embedded in the institutional order of a country. It is thus imperative to investigate the composition of such prosperity-enhancing institutional orders. This paper proposes a measurement of bundles of institutions that channel the positive effect of democratic institutions on economic prosperity. We construct composite sub-indices measuring the political, economic and societal institutional quality as well as an overall index combining these bundles of institutions. Index data is available for 148 countries between 1995 and 2010. We obtain scores summarizing the level of prosperity-enhancing institutions that the respective countries exhibit with regard to their overall institutional setting and to the three bundles of institutions, and we grade the countries accordingly. Since the indices allow for inter-temporal comparisons, we can highlight a country’s achievements in institutional development, amongst other aspects of country comparisons, and we show their value as a tool in the analysis of determinants of economic prosperity. The proposed indices are a step towards a more systematic international comparison of democratic institutional settings.     

Is It Culture or Democracy? The Impact of Democracy and Culture on Happiness

We analyze the relation between democracy and perceived subjective well-being while controlling for other relevant determinants such as culture measured by languages. We conduct a cross-national analysis covering 28 countries using data from the 1998 International Social Survey Programme. Contrasting existing empirical evidence, we observe a significant positive relationship between democracy and happiness even when controlling for income and culture measured by language and religion. The effect of democracy on happiness is stronger in countries with an established democratic tradition. Earlier versions of this paper were presented at the Workshop on Happiness, Economics and Interpersonal Relationships (4/12/2004), the International Conference of Panel Data Users in Switzerland (26/02/2005), the American Public Choice Society Conference (10/03/2005), the Annual Conference of the Swiss Society for Statistics and Economics (17/03/2005), and the European Public Choice Society Conference (3/04/2005). We would like to thank conference participants and particularly Alois Stutzer for helpful comments. We thank the Swiss National Science Foundation for financial support (Grant-No. 5004-58524).     

Wealth Of Nations,Individual Income andLife Satisfaction in 42 Countries:A Multilevel Approach

In this study, individual and contextualdeterminants of life satisfaction in 42countries were examined. The question wasaddressed whether income at the individuallevel and wealth at the national level affectlife satisfaction of individuals. In addition,the hypothesis was tested whether therelationship between income and lifesatisfaction is stronger in poor countries thanin more prosperous ones. Multilevel modelingallows differentiating between main andinteraction effects of group and individuallevel variables on the dependent variable. Itwas used to explore a possible multilevelstructure in the data, in which individuals areviewed as micro observations and countries asmacro observations. The results showed that, inaddition to and independent of individualincome, the economic prosperity of a nationcontributed to a person's life satisfactionlevel. Also, the hypothesized cross-levelinteraction between wealth and income wastested and found significant: poor peopleliving in poor countries were less satisfiedwith their lives than poor people living inaffluent countries. Moreover, complex variationin life satisfaction was found at thewithin-nation level: poor individuals variedmore in their life satisfaction than richindividuals.     

影响牧区牧民幸福感因素的实证研究——天祝藏族自治县调查报告

改革开放以来。我国经济建设取得了辉煌成就,目前,部分地区甚至一些大城市的人均收入已赶上发达国家．但其总体幸福水平不尽人意。相反,有调查显示收入水平明显大幅度低于城市居民的农民。其生活满意感超过了城市居民。出现了“幸福悼论”现象。本文依据贫困牧区县的调查资料,运用ordered logit model对牧民幸福感同收入及若干非经济因素之间关系的维度和强度进行了考量。在假定牧区宗教及文化习俗对牧民的幸福感均有恒定影响的前提下,分析结果显示．牲畜数量是牧民的主要幸福源泉;牧区女性的幸福感要明显低于男性;牧民收入水平尚较低的情况下。人均年收入同幸福感显著正相关;牧民自身的教育投入对幸福感的提高起抑制作用：以30岁为拐点．牧区成年人和老年人的幸福感相对低于青年人;遇到资金周转困难时,银行对牧民家庭的贷款有助于改善幸福状况：物质条件对幸福感不具有明显的影响。     

Friendship and subjective well-being in Spain: A cross-national comparison with the United States

This paper empirically examines three propositions which are derived from network theory, particularly the relationship between friends' network and happiness level as a subjective well-being indicator. Using friendship network data obtained from 1985 NORC General Social Survey for the U.S., and from 1993 CIRES Social Survey for Spain, a cross-national comparison between Spain and the U.S. was performed. Results are compared with previous major Davis' and Burt's works for the U.S. It was found that there was a significant, strong association between happiness and friends' network size for both countries, and that there was not a great happiness difference between them. However, close friendship has a contrary effect on happiness when data from both countries are compared. Concerning socioeconomic status, happiness increased with income, although this effect was higher in Spain than in the U.S.Financial support for this project was provided by the Department of Sociology, UMA, and University Computer Center. I am indebted to Juan A. Villena and Mary Oliver for helpful comments on early drafts, and to R. Hidalgo for computing assistance.     

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

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.     

The Impact of Economic Crisis on Happiness

There is a common belief that economic crisis will lead to a decrease in subjective wellbeing. Previous studies indicate that income is correlated with happiness and unemployment with unhappiness. The relationship between increased income and happiness is well documented while the impact of decreased income has been less explored. The aim of this paper is to study how the economic downfall in Iceland, followed by reduced income and increased unemployment, affects happiness as well as to explore which groups are most vulnerable to changes in happiness and which are most resilient. The study is a longitudinal, nationally representative postal survey which assessed 5,918 individual’s aged 18–79. A total of 4,092 (77.3%) answered again in 2009. The relationship between economic factors and happiness was explored using multiple linear regression to find out how much they explain of the happiness variance and the changes in happiness, together with demographic factors, health and social relationships. Results indicate that income and unemployment did not predict happiness but financial difficulties did. A decrease in happiness was detected after the collapse. The change in happiness from 2007 to 2009 was normally distributed, 40% had the same score in both years and an equal number increased as decreased. The explored factors did not explain the changes in happiness. The economic crisis had a limited affect on happiness. Those with financial difficulties were hardest hit. Changes in happiness need to be studied further since they are not well explained by the factors which influence cross-sectional levels of happiness.     

Relationship Between Socio-Economic Values and Wellbeing: An Overview Research in Asia

This paper investigates ten Asian nations to consider how socio-economic values affect happiness and satisfaction. Moreover, it considers whether economic factors can strongly affect wellbeing under certain conditions. Males in Asia are said they have more opportunities to obtain higher happiness and satisfaction but it does not happen in the current study. Unemployment has negative and significant impact with regard to happiness and satisfaction in developing countries yet it does not have the same effect in developed nations. It is believed cultural value positively affects happiness and satisfaction in East Asia but the result in the models is different with no clear relationship between this variable and wellbeing. Furthermore, some people declare that a relative increase of income compared to the lowest group will lead them to lower life satisfaction.     

A global perspective on happiness and fertility

The literature on fertility and happiness has neglected comparative analysis. We investigate the fertility/happiness association using data from the world values surveys for 86 countries. We find that, globally, happiness decreases with the number of children. This association, however, is strongly modified by individual and contextual factors. Most importantly, we find that the association between happiness and fertility evolves from negative to neutral to positive above age 40, and is strongest among those who are likely to benefit most from upward intergenerational transfers. In addition, analyses by welfare regime show that the negative fertility/ happiness association for younger adults is weakest in countries with high public support for families, and the positive association above age 40 is strongest in countries where old-age support depends mostly on the family. Overall these results suggest that children are a long-term investment in well-being, and highlight the importance of the life-cycle stage and contextual factors in explaining the happiness/fertility association.     

Relative Income,Relative Assets,and Happiness in Urban China

Does more money always mean that people are happier with their lives? To test the social comparison hypothesis as applied to happiness, this study uses survey data from the 2002 Chinese Household Income Project to examine the association between household economic resources and happiness in urban China. Household economic resources are measured as both income and assets (e.g., net worth and net worth minus home equity). In addition, the analyses include measures of relative income and relative assets. Results of ordinary least square regression analysis show a positive association of absolute income with the happiness score whereas relative income is negatively associated with happiness. Although household assets are a significant and positive predictor of self-assessments of happiness, measures of relative household assets do not correlate with happiness. Study findings suggest the level of happiness among urban populations could be increased through policies that promote pro-poor growth and equal distribution of economic resources. In addition, introducing asset-building policies as supplements to other social assistance programs may promote happiness.     

How Social Relations and Structures can Produce Happiness and Unhappiness: An International Comparative Analysis

In this paper, subjective well being, as measured by survey questions on happiness and life satisfaction, is investigated from a sociological-comparative point of view. The central thesis is that happiness and satisfaction must be understood as the outcome of an interaction process between individual characteristics and aspirations on the one side, and social relations and macrosocial structures on the other side. A distinction is made between life satisfaction and happiness; the former is more seen as the outcome of an evaluation process including material and social aspirations and achievements, the latter as an outcome of positive experiences, particularly close personal relationships. The focus of this paper is on micro- and macrosocial conditions favouring or inhibiting the emergence of happiness and satisfaction. It is hypothesized that dense and good basic social relations, occupational involvement and success, sociocultural (religious and altruistic) orientations and participation are conducive to happiness and life satisfaction; the same should be true at the macrolevel for economic prosperity, relatively equal social structures, a well-established welfare state and political democracy. The latter conditions, however, should be more important for life satisfaction than for happiness. A comparative, multilevel regression analysis of happiness in 41 nations around the world is carried out (using the World Value Survey 1995–1997). Both our general assumption and most of the specific hypotheses could be confirmed. It turned very clearly that “happiness” and “life satisfaction” are two different concepts. It could be shown that microsocial embedding and sociocultural integration of a person are highly relevant for happiness. However, contrary to earlier studies, we find that macrosocial factors like the economic wealth of nation, the distribution of income, the extent of the welfare state and political freedom are also relevant, particularly for satisfaction. What counts most is the ability to cope with life, including subjective health and financial satisfaction, close social relations, and the economic perspectives for improvement in the future, both at the level of the individual and at that of the society. These abilities are certainly improved by favourable macrosocial conditions and institutions, such as a more equal income distribution, political democracy and a welfare state.     

Basic Needs and Wealth as Independent Determinants of Happiness: An Illustration from Thailand

Thailand has been a global economic success story, transforming from one of the poorest countries in Southeast Asia in the 1960s, to a modern and dynamic nation, and all within the lifetime of the current generation. However, growth has been accompanied by marked increases in economic inequality both at the regional and individual levels. In this context studying how relatively poor people appraise their situation (‘subjective wellbeing’) and how this relates to traditional ‘objective’ measures of wellbeing such as wealth and basic needs is particularly relevant. This paper investigates the relationship between basic needs as defined by the Theory of Human needs (THN, Doyal and Gough 1991), material wealth and happiness. Specifically, we intend to answer the following research question: Are wealth and basic needs indicators always interchangeable when analyzing happiness determinants in low income settings? The paper focuses on seven communities in the South and North-east of Thailand with contrasting levels of access to markets and services. It challenges the common assumption that at low economic levels, wealth or income matter for people’s happiness because they increase satisfaction of basic needs, arguing instead that wealth might contribute to happiness for personal or symbolic reasons, which are not related to the use of goods as basic needs satisfiers. Thus, it suggests that indicators of wealth and basic needs should not be used interchangeably when studying happiness determinants in low income settings.     

Does Good Governance Enhance Happiness: A Cross Nation Study

The purpose of this paper is to analyze the efficiency of the countries over the period of 10 years by applying data envelopment analysis (DEA). Based on rational and factual parameters such as freedom of press, freedom of religion, percentage of export in Gross Domestic Product (GDP), index of globalization, life expectancy at birth, gender ratio etc., this paper attempts to measure the efficiency of happiness. A combination of social and economic factors has been used to measure technical efficiency. The contribution of this paper is twofold. First, it measures the relative efficiency of all the countries included in the study. The nations have been ranked as per their relative efficiency and the peer group has been formed. Second a comparison between the rich and the poor countries have been done to test empirically whether the economic growth enhances the happiness among people. Presently, more than 3,000 studies have been published on happiness and Veenhoven in 2004 created a database called World Database of Happiness. The World Database of Happiness has attempted to present the available research findings on happiness. Part of the findings on happiness in nations is available in ‘States of nations’. For the research purpose, States of Nations and the data published by have been considered. Although happiness has been quantified and the existing literature has sufficient empirical evidences of the same, in the present context, the relative efficiency has been calculated for the countries on basis of objective and subjective happiness parameters. As per the literature, happiness has two aspects (1) objective and (2) subjective. Objective parameters are external to the individuals and covers material living parameters viz. GDP growth, income, nutrition, mortality rate, literacy etc. However, Subjective indicators measure the quality of life of the individuals. These are summarized as ‘‘subjective well-being’’. The various parameters considered in the study capture different aspects of happiness. The result shows how the government can increase the happiness of the people by analyzing the behavior and expectations. People express their preference explicitly about political parties, religion believes, law and order situation, trust in official institutions etc. Although, the behavior of people largely depends upon availability of goods and services in the market, the government can make budgets according to priority or preferences of people. Another way to increase happiness can be done by analyzing the peer group, which is an outcome of DEA. This shows the nations which are similar in terms of their economic and social conditions. The government can compare the prevailing conditions in different countries that improve the condition in their respective country. This could be an effective method as some of the parameters can be replicable in order to make people happier. The limitation of this study is lack of availability of data for many countries. As the number of countries increases, a change in the relative efficiency can be observed. Therefore, a future study can be conducted where the relevant data can be collected and a more global result can be obtained.