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Can Money Buy Happiness? Subjective Wellbeing and Its Relationship with Income, Relative Income, Monetary and Non-monetary Poverty in Bangladesh

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  • Salauddin Tauseef

    (University of Manchester)

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.

Suggested Citation

  • Salauddin Tauseef, 2022. "Can Money Buy Happiness? Subjective Wellbeing and Its Relationship with Income, Relative Income, Monetary and Non-monetary Poverty in Bangladesh," Journal of Happiness Studies, Springer, vol. 23(3), pages 1073-1098, March.
    • Handle: RePEc:spr:jhappi:v:23:y:2022:i:3:d:10.1007_s10902-021-00443-9
    DOI: 10.1007/s10902-021-00443-9
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    2. Li, Junpeng & Ma, Wanglin & Gong, Binlei, 2023. "Market participation and subjective well-being of maize farmers," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 941-960.

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    More about this item

    Keywords

    Subjective wellbeing; Income; Relative income; Reference group; Poverty; Multidimensional poverty index; Panel data; Bangladesh;
    All these keywords.

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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