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Income, Aspirations and the Hedonic Treadmill in a Poor Society

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  • John Knight
  • Ramani Gunatilaka

Abstract

A specially designed household survey for rural China is used to analyse the determinants of aspirations for income, proxied by reported minimum income need, and the determinants of subjective well-being, both satisfaction with life and satisfaction with income. It is found that aspiration income is a positive function of actual income and reference income, and that subjective well-being is raised by actual income but lowered by aspiration income. These findings suggests the existence of a partial hedonic treadmill, and can help to explain why subjective well-being in China appears not to have risen despite rapid economic growth.

Suggested Citation

  • John Knight & Ramani Gunatilaka, 2009. "Income, Aspirations and the Hedonic Treadmill in a Poor Society," Economics Series Working Papers 468, University of Oxford, Department of Economics.
    • Handle: RePEc:oxf:wpaper:468
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    More about this item

    Keywords

    Adaptation; Aspirations; China; Easterlin Paradox; Happiness; Hedonic treadmill; Subjective well-being;
    All these keywords.

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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