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Lakshmanasamy, T.
- Is the Effect of Income on Happiness Same for All in India - A Panel Quantile Regression Analysis of Heterogeneity in the Relationship between Income and Life Satisfaction
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1 Department of Econometrics, University of Madras, Chennai, Tamil Nadu, IN
1 Department of Econometrics, University of Madras, Chennai, Tamil Nadu, IN
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Journal of Organization and Human Behaviour, Vol 9, No 1&2 (2020), Pagination: 30-44Abstract
The OLS and ordered probit estimation of a causal relationship between income and happiness assume linearity in individual and average income effects and the same average effect holds over the entire range of subjective well-being distribution. The response of well-being to income changes is not the same for poor and rich, dissatisfied or unhappy, and satisfied or happy people. This paper estimates heterogeneity in the income-life satisfaction relationship at specific locations of subjective well-being distribution by panel quantile regression method. The data is derived from six waves of the World Value Survey for 12 major states of India for 24 years over the period 1990-2014. The descriptive analysis of well-being distribution across states shows heterogeneity in the income-well-being relationship between states and individuals within states. The across-states over-time panel quantile regression results reveal that estimation of average effect only provides an incomplete picture of the effect of income at both ends of the conditional distribution of well-being indicators, life satisfaction and happiness levels. The quantile regression estimates vastly differ not only from the mean estimates, but also across quantiles. Life satisfaction falls and happiness rises with an increase in average state income and the income effect is strong at the lower end than at the upper end of subjective well-being distribution.Keywords
Life Satisfaction, Happiness, Subjective Well-Being Distribution, NSDP Per Capita, Differential Effects, Quantile Regression.
- Determinants of Happiness in India: Time Series Ordered Probit Estimation of Subjective Well-being
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1 ICSSR Senior Fellow and Formerly Professor, Department of Econometrics, University of Madras, Chennai, Tamil Nadu, IN
1 ICSSR Senior Fellow and Formerly Professor, Department of Econometrics, University of Madras, Chennai, Tamil Nadu, IN
Source
Journal of Organization and Human Behaviour, Vol 11, No 1 (2022), Pagination: 11-20Abstract
Attaining the highest level of happiness is the utmost concern of individuals as well as the nations and the whole human society. Individuals feel happiness can be achieved by acquiring income and material perquisites. Though wealth and happiness are positively correlated within a society at a given point of time, in the long run, increasing the income of all in a country may not raise the happiness of all. This lack of a systematic long-run relationship between income and happiness is often due to social comparison, in which individuals evaluate their life satisfaction relative to others’ income. Using the WVS data for eight states of India for the period 1990–2006, this paper examines whether individuals’ happiness or life satisfaction is influenced by their absolute income or by relative income. The estimated ordered probit results show that relative income matters more than individual absolute income for the happiness of individuals. An improvement in the income rank of an individual relative to the reference group will increase the individual happiness level. The results are consistent with the Easterlin paradox that social comparison explains the nill income-happiness relationship in the long run and only relative income/position matters for happiness more than absolute income.Keywords
Subjective Well-Being, Income Effect, Social Comparison, Reference Income, Absolute vs Relative Income, Income Rank, Ordered Probit EstimationReferences
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