IDEAS home Printed from https://ideas.repec.org/a/eee/jpolmo/v36y2014i6p994-1007.html
   My bibliography  Save this article

What affects happiness: Absolute income, relative income or expected income?

Author

Listed:
  • Tsui, Hsiao-Chien

Abstract

This study probes the reasons why increased income does not enhance happiness based on the effects of relative income and expected income. The study analysis is based on results from the Taiwan Social Change Survey from 1999 to 2002, using an ordered probit model. The findings demonstrate that the Taiwanese people are happier with an increase in absolute income. However, the marginal effect is reducing. In addition, relative income and expected income meet the expectation, indicating that people's happiness is not only related to absolute income, but also closely associated with the average income found in society and expected income.

Suggested Citation

  • Tsui, Hsiao-Chien, 2014. "What affects happiness: Absolute income, relative income or expected income?," Journal of Policy Modeling, Elsevier, vol. 36(6), pages 994-1007.
    • Handle: RePEc:eee:jpolmo:v:36:y:2014:i:6:p:994-1007
    DOI: 10.1016/j.jpolmod.2014.09.005
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0161893814000945
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jpolmod.2014.09.005?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Oswald, Andrew J, 1997. "Happiness and Economic Performance," Economic Journal, Royal Economic Society, vol. 107(445), pages 1815-1831, November.
    2. Blanchflower, David G. & Oswald, Andrew J., 2004. "Well-being over time in Britain and the USA," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1359-1386, July.
    3. Stutzer, Alois, 2004. "The role of income aspirations in individual happiness," Journal of Economic Behavior & Organization, Elsevier, vol. 54(1), pages 89-109, May.
    4. Frey, Bruno S & Stutzer, Alois, 2000. "Happiness, Economy and Institutions," Economic Journal, Royal Economic Society, vol. 110(466), pages 918-938, October.
    5. Mookerjee, Rajen & Beron, Krista, 2005. "Gender, religion and happiness," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 34(5), pages 674-685, October.
    6. Clark, Andrew E & Oswald, Andrew J, 1994. "Unhappiness and Unemployment," Economic Journal, Royal Economic Society, vol. 104(424), pages 648-659, May.
    7. Michael Hagerty & Ruut Veenhoven, 2003. "Wealth and Happiness Revisited – Growing National Income Does Go with Greater Happiness," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 64(1), pages 1-27, October.
    8. Bruno S. Frey, 2018. "Economics of Happiness," SpringerBriefs in Economics, Springer, number 978-3-319-75807-7, April.
    9. Easterlin, Richard A., 2006. "Life cycle happiness and its sources: Intersections of psychology, economics, and demography," Journal of Economic Psychology, Elsevier, vol. 27(4), pages 463-482, August.
    10. Meng-Wen Tsou & Jin-Tan Liu, 2001. "Happiness and Domain Satisfaction in Taiwan," Journal of Happiness Studies, Springer, vol. 2(3), pages 269-288, September.
    11. Easterlin, Richard A., 1995. "Will raising the incomes of all increase the happiness of all?," Journal of Economic Behavior & Organization, Elsevier, vol. 27(1), pages 35-47, June.
    12. Latif, Ehsan, 2010. "Crisis, unemployment and psychological wellbeing in Canada," Journal of Policy Modeling, Elsevier, vol. 32(4), pages 520-530, July.
    13. Hung‐Lin Tao & Shih‐Yung Chiu, 2009. "The Effects of Relative Income and Absolute Income on Happiness," Review of Development Economics, Wiley Blackwell, vol. 13(1), pages 164-174, February.
    14. Dean, James W., 2007. "National welfare and individual happiness: Income distribution and beyond," Journal of Policy Modeling, Elsevier, vol. 29(4), pages 567-575.
    15. Easterlin, Richard A., 1974. "Does Economic Growth Improve the Human Lot? Some Empirical Evidence," MPRA Paper 111773, University Library of Munich, Germany.
    16. Hung-Lin Tao, 2005. "The effects of income and children on marital happiness — evidence from middle- and old-aged couples," Applied Economics Letters, Taylor & Francis Journals, vol. 12(8), pages 521-524.
    17. J. Solnick, Sara & Hemenway, David, 1998. "Is more always better?: A survey on positional concerns," Journal of Economic Behavior & Organization, Elsevier, vol. 37(3), pages 373-383, November.
    18. Ferrer-i-Carbonell, Ada, 2005. "Income and well-being: an empirical analysis of the comparison income effect," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 997-1019, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sałach-Dróżdż Katarzyna, 2024. "Wealth inequality, income inequality, and subjective well-being: A cross-country study," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 60(3), pages 227-242.
    2. La, Binh Thanh & Lim, Steven & Cameron, Michael P. & Tran, Tuyen Quang & Nguyen, Minh Thi, 2021. "Absolute income, comparison income and subjective well-being in a transitional country: Panel evidence from Vietnamese household surveys," Economic Analysis and Policy, Elsevier, vol. 72(C), pages 368-385.
    3. Hugo Briseño & Guillermo Estefani & Alejandra Núñez-Acosta & Manuel Soto-Pérez, 2022. "Urban Risks and Their Influence on Subjective Well-being Around the World," Journal of Happiness Studies, Springer, vol. 23(4), pages 1617-1636, April.
    4. Cheng, Fei & Chen, Tong & Chen, Qiao, 2020. "Rewards based on public loyalty program promote cooperation in public goods game," Applied Mathematics and Computation, Elsevier, vol. 378(C).
    5. Shuai Zhang & Binbin Liu & Dajian Zhu & Mingwang Cheng, 2018. "Explaining Individual Subjective Well-Being of Urban China Based on the Four-Capital Model," Sustainability, MDPI, vol. 10(10), pages 1-14, September.
    6. Zhang, Jiaping & Cheng, Mingwang & Yu, Ning, 2020. "Internet Use and Lower Life Satisfaction: The Mediating Effect of Environmental Quality Perception," Ecological Economics, Elsevier, vol. 176(C).
    7. Hizkia H. D. Tasik, 2019. "A Tale of Income and Energy in Rural Areas: What Contributes to People s Happiness? Evidence from Eastern Indonesia," International Journal of Energy Economics and Policy, Econjournals, vol. 9(4), pages 248-255.
    8. Dimiter Toshkov, 2022. "The Relationship Between Age and Happiness Varies by Income," Journal of Happiness Studies, Springer, vol. 23(3), pages 1169-1188, March.
    9. Brian Chi-ang Lin & Siqi Zheng & Eleftherios Giovanis & Oznur Ozdamar, 2016. "Structural Equation Modelling And The Causal Effect Of Permanent Income On Life Satisfaction: The Case Of Air Pollution Valuation In Switzerland," Journal of Economic Surveys, Wiley Blackwell, vol. 30(3), pages 430-459, July.
    10. Marcin Piekałkiewicz, 2017. "Why do economists study happiness?," The Economic and Labour Relations Review, , vol. 28(3), pages 361-377, September.
    11. Fabrizio Antolini & Biagio Simonetti, 2019. "The Easterlin Paradox in Italy, or the Paradox in Measuring? Define Happiness Before Investigating It," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 146(1), pages 263-285, November.
    12. Drakopoulos, Stavros A., 2023. "The Economics of Wellbeing and Psychology: An Historical and Methodological Viewpoint," MPRA Paper 117891, University Library of Munich, Germany.
    13. Zhijian Zhang & Xueyuan Wang, 2021. "Ambition or Jealousy? It Depends on Whom you are Compared with," Journal of Happiness Studies, Springer, vol. 22(3), pages 1189-1215, March.
    14. A. l. Moro-Egido & M. Navarro & A. Sánchez, 2022. "Changes in Subjective Well-Being Over Time: Economic and Social Resources do Matter," Journal of Happiness Studies, Springer, vol. 23(5), pages 2009-2038, June.
    15. Kaizhi Yu & Yun Zhang & Hong Zou & Chenchen Wang, 2019. "Absolute Income, Income Inequality and the Subjective Well-Being of Migrant Workers in China: Toward an Understanding of the Relationship and Its Psychological Mechanisms," IJERPH, MDPI, vol. 16(14), pages 1-27, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Caporale, Guglielmo Maria & Georgellis, Yannis & Tsitsianis, Nicholas & Yin, Ya Ping, 2009. "Income and happiness across Europe: Do reference values matter?," Journal of Economic Psychology, Elsevier, vol. 30(1), pages 42-51, February.
    2. David G. Blanchflower & Andrew J. Oswald, 2004. "Money, Sex and Happiness: An Empirical Study," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(3), pages 393-415, October.
    3. Wen-Chun Chang, 2013. "Climbing up the Social Ladders: Identity, Relative Income, and Subjective Well-being," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 113(1), pages 513-535, August.
    4. Stefano Bartolini & Ennio Bilancini & Francesco Sarracino, 2013. "Predicting the Trend of Well-Being in Germany: How Much Do Comparisons, Adaptation and Sociability Matter?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 114(2), pages 169-191, November.
    5. Roberta Distante, 2013. "Subjective Well-Being, Income and Relative Concerns in the UK," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 113(1), pages 81-105, August.
    6. Popova, Olga, 2014. "Can religion insure against aggregate shocks to happiness? The case of transition countries," Journal of Comparative Economics, Elsevier, vol. 42(3), pages 804-818.
    7. Bratsiotis, George J. & Peng, Baochun, 2008. "Social interaction and effort in a success-at-work augmented utility model," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(4), pages 1309-1318, August.
    8. Fengyu Wu, 2020. "An Examination of the Effects of Consumption Expenditures on Life Satisfaction in Australia," Journal of Happiness Studies, Springer, vol. 21(8), pages 2735-2771, December.
    9. Nattavudh Powdthavee, 2003. "Is the Structure of Happiness Equations the Same in Poor and Rich Countries? The Case of South Africa," Development and Comp Systems 0309003, University Library of Munich, Germany, revised 06 Nov 2003.
    10. Dolan, Paul & Peasgood, Tessa & White, Mathew, 2008. "Do we really know what makes us happy A review of the economic literature on the factors associated with subjective well-being," Journal of Economic Psychology, Elsevier, vol. 29(1), pages 94-122, February.
    11. Marco Le Moglie & Letizia Mencarini & Chiara Rapallini, 2017. "Do rich parents enjoy children less?," Working Papers 101, "Carlo F. Dondena" Centre for Research on Social Dynamics (DONDENA), Università Commerciale Luigi Bocconi.
    12. Böhnke, Petra & Kohler, Ulrich, 2008. "Well-being and inequality," Discussion Papers, Research Unit: Inequality and Social Integration SP I 2008-201, WZB Berlin Social Science Center.
    13. Hajdu, Tamás & Hajdu, Gábor, 2011. "A hasznosság és a relatív jövedelem kapcsolatának vizsgálata magyar adatok segítségével [Examining the relation of utility and relative income using Hungarian data]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(1), pages 56-73.
    14. Torgler, Benno & Schmidt, Sascha L & Frey, Bruno S., 2006. "The Power of Positional Concerns: A Panel Analysis," Berkeley Olin Program in Law & Economics, Working Paper Series qt1z14v7zt, Berkeley Olin Program in Law & Economics.
    15. Stutzer, Alois, 2004. "The role of income aspirations in individual happiness," Journal of Economic Behavior & Organization, Elsevier, vol. 54(1), pages 89-109, May.
    16. Konow, James & Earley, Joseph, 2008. "The Hedonistic Paradox: Is homo economicus happier," Journal of Public Economics, Elsevier, vol. 92(1-2), pages 1-33, February.
    17. Stavros Drakopoulos, 2008. "The paradox of happiness: towards an alternative explanation," Journal of Happiness Studies, Springer, vol. 9(2), pages 303-315, June.
    18. AMENDOLA, Adalgiso & DELL'ANNO, Roberto & PARISI, Lavinia, 2015. "Happiness, Inequality and Relative Concerns in European Countries," CELPE Discussion Papers 136, CELPE - CEnter for Labor and Political Economics, University of Salerno, Italy.
    19. Michela Ponzo, 2011. "Occupational Status and Individual Subjective Well-Being in Italy," QA - Rivista dell'Associazione Rossi-Doria, Associazione Rossi Doria, issue 3, September.
    20. Filiz Gülal & Adam Ayaita, 2020. "The Impact of Minimum Wages on Well-Being: Evidence from a Quasi-experiment in Germany," Journal of Happiness Studies, Springer, vol. 21(7), pages 2669-2692, October.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jpolmo:v:36:y:2014:i:6:p:994-1007. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505735 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.