Income inequality and happiness in China

John Knight

Chapter 8 in Handbook on Inequality in China, 2025, pp 168-193 from Edward Elgar Publishing

Abstract: The effect of inequality on happiness should intrigue social scientists. Of the many dimensions of income inequality, we explore four, analyzing the China Household Income Project (CHIP) datasets. Does actual or perceived inequality have a greater effect on happiness? We find that perceptions of inequality are the more important. How broad is the reference group with which people compare themselves? They report that it is narrow; and indeed narrowly defined inequality has the greater effect on happiness. Do perceptions of the degree of fairness of inequality matter? They do, as they ameliorate the adverse effect of inequality on happiness, especially for the poorest. Is it self-centered or community-based inequality which affects happiness? Both measures have significant effects, but in opposite directions. Finally, the role of relative income in determining aspirations and the role of aspirations in determining happiness are examined. The research and policy implications are discussed.

Keywords: China; Happiness; Income inequality; Reference group; Relative income (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035317790
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