Nothing Special   »   [go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/qut/auncer/2008-26.html
   My bibliography  Save this paper

Are optimistic expectations keeping the Chinese happy?

Author

Listed:
  • Paul Frijters

    (QUT)

  • Amy Y.C. Liu

    (ANU)

  • Xin Meng

    (ANU)

Abstract
In this paper we study the effect of optimistic income expectations on life satisfaction amongst the Chinese population. Using a large scale household survey conducted in 2002 we find that the level of optimism about the future is particularly strong in the countryside and amongst rural-to-urban migrants. The importance of these expectations for life satisfaction is particularly pronounced in the urban areas, though also highly significant for the rural area. If expectations were to reverse from positive to negative, we calculate that this would have doubled the proportion of unhappy people and reduced proportion of very happy people by 48%. We perform several robustness checks to see if the results are driven by variations in precautionary savings or reverse causality.

Suggested Citation

  • Paul Frijters & Amy Y.C. Liu & Xin Meng, 2008. "Are optimistic expectations keeping the Chinese happy?," NCER Working Paper Series 37, National Centre for Econometric Research.
    • Handle: RePEc:qut:auncer:2008-26
    as

    Download full text from publisher

    File URL: http://www.ncer.edu.au/papers/documents/NCER_WpNo37Nov08.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Andries De Grip & Maarten Lindeboom & Raymond Montizaan, 2012. "Shattered Dreams: The Effects of Changing the Pension System Late in the Game," Economic Journal, Royal Economic Society, vol. 122(559), pages 1-25, March.
    2. Markus K. Brunnermeier & Jonathan A. Parker, 2005. "Optimal Expectations," American Economic Review, American Economic Association, vol. 95(4), pages 1092-1118, September.
    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. Claudia Senik, 2002. "When Information Dominates Comparison: A Panel Data Analysis Using Russian Subjective Data," William Davidson Institute Working Papers Series 495, William Davidson Institute at the University of Michigan.
    5. N. Gregory Mankiw & Ricardo Reis & Justin Wolfers, 2004. "Disagreement about Inflation Expectations," NBER Chapters, in: NBER Macroeconomics Annual 2003, Volume 18, pages 209-270, National Bureau of Economic Research, Inc.
    6. Meng,Xin, 2009. "Labour Market Reform in China," Cambridge Books, Cambridge University Press, number 9780521121118.
    7. Bruno S. Frey & Alois Stutzer, 2002. "What Can Economists Learn from Happiness Research?," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 402-435, June.
    8. Daniel S. Hamermesh, 2004. "Subjective Outcomes in Economics," Southern Economic Journal, John Wiley & Sons, vol. 71(1), pages 1-11, July.
    9. Holbig, Heike, 2006. "Ideological Reform and Political Legitimacy in China: Challenges in the Post-Jiang Era," GIGA Working Papers 18, GIGA German Institute of Global and Area Studies.
    10. Dwayne Benjamin & Loren Brandt & John Giles, 2011. "Did Higher Inequality Impede Growth in Rural China?," Economic Journal, Royal Economic Society, vol. 121(557), pages 1281-1309, December.
    11. John Knight & Ramani Gunatilaka, 2010. "The Rural-Urban Divide in China: Income but Not Happiness?," Journal of Development Studies, Taylor & Francis Journals, vol. 46(3), pages 506-534.
    12. Matthew Rabin, 1998. "Psychology and Economics," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 11-46, March.
    13. Das, Marcel & van Soest, Arthur, 1999. "A panel data model for subjective information on household income growth," Journal of Economic Behavior & Organization, Elsevier, vol. 40(4), pages 409-426, December.
    14. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    15. Easterlin, Richard A, 2001. "Income and Happiness: Towards an Unified Theory," Economic Journal, Royal Economic Society, vol. 111(473), pages 465-484, July.
    16. Senik, Claudia, 2008. "Is man doomed to progress?," Journal of Economic Behavior & Organization, Elsevier, vol. 68(1), pages 140-152, October.
    17. Michael Hagerty, 2003. "Was Life Better in the “Good Old Days”? Intertemporal Judgments of Life Satisfaction," Journal of Happiness Studies, Springer, vol. 4(2), pages 115-139, June.
    18. Appleton, Simon & Song, Lina, 2008. "Life Satisfaction in Urban China: Components and Determinants," World Development, Elsevier, vol. 36(11), pages 2325-2340, November.
    19. Souleles, Nicholas S, 2004. "Expectations, Heterogeneous Forecast Errors, and Consumption: Micro Evidence from the Michigan Consumer Sentiment Surveys," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(1), pages 39-72, February.
    20. John Knight & Ramani Gunatilaka, 2008. "Aspirations, Adaptation and Subjective Well-Being of Rural-Urban Migrants in China," Economics Series Working Papers 381, University of Oxford, Department of Economics.
    21. Das, J.W.M. & Dominitz, J. & van Soest, A.H.O., 1997. "Comparing Predictions and Outcomes : Theory and Application to Income Changes," Other publications TiSEM 6eef11dd-0ae4-4673-b8c0-2, Tilburg University, School of Economics and Management.
    22. Knight, John & Gunatilaka, Ramani, 2010. "Great Expectations? The Subjective Well-being of Rural-Urban Migrants in China," World Development, Elsevier, vol. 38(1), pages 113-124, January.
    23. Daniel S. Hamermesh, 2004. "Subjective Outcomes in Economics," Southern Economic Journal, John Wiley & Sons, vol. 71(1), pages 2-11, July.
    Full references (including those not matched with items on IDEAS)

    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. Guriev, Sergei & Zhuravskaya, Ekaterina & Frijters, Paul & Liuy, Amy Y.C. & Mengz, Xin, 2009. "Happiness in transition countries [2 articles]," CEPREMAP Working Papers (Docweb) 0902, CEPREMAP.
    2. Paul Frijters & Harry Greenwell & John P. Haisken‐DeNew & Michael A. Shields, 2009. "How well do individuals predict their future life satisfaction? Evidence from panel data following a nationwide exogenous shock," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 42(4), pages 1326-1346, November.
    3. Sha Fan & Renuka Mahadevan, 2023. "Optimistic income expectations and meeting those expectations: What matters for well‐being in a developing country?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 70(2), pages 115-132, May.
    4. Clark, Andrew E. & Senik, Claudia, 2010. "Will GDP Growth Increase Happiness in Developing Countries?," CEPREMAP Working Papers (Docweb) 1024, CEPREMAP.
    5. Knight, John & Gunatilaka, Ramani, 2012. "Income, aspirations and the Hedonic Treadmill in a poor society," Journal of Economic Behavior & Organization, Elsevier, vol. 82(1), pages 67-81.
    6. Senik, Claudia, 2009. "Direct evidence on income comparisons and their welfare effects," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 408-424, October.
    7. Alois Stutzer & Bruno S. Frey, 2008. "Stress that Doesn't Pay: The Commuting Paradox," Scandinavian Journal of Economics, Wiley Blackwell, vol. 110(2), pages 339-366, June.
    8. Andrew E. Clark & Paul Frijters & Michael A. Shields, 2006. "Income and happiness: Evidence, explanations and economic implications," PSE Working Papers halshs-00590436, HAL.
    9. Akay, Alpaslan & Bargain, Olivier & Zimmermann, Klaus F., 2012. "Relative concerns of rural-to-urban migrants in China," Journal of Economic Behavior & Organization, Elsevier, vol. 81(2), pages 421-441.
    10. Qianping Ren & Maoliang Ye, 2017. "Donations Make People Happier: Evidence from the Wenchuan Earthquake," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 132(1), pages 517-536, May.
    11. Marta Barazzetta, 2015. "The asymmetric effect of expectations on subjective well-being," Working Papers 374, ECINEQ, Society for the Study of Economic Inequality.
    12. Qian Li & Xiaoguang Huang & Hanwen Zhang, 2023. "Exploring the Effects of Consumption Expenditures on Life Satisfaction in China," Journal of Happiness Studies, Springer, vol. 24(6), pages 1963-1990, August.
    13. Emma Pleeging & Martijn Burger & Job Exel, 2021. "Hope Mediates the Relation between Income and Subjective Well-Being," Journal of Happiness Studies, Springer, vol. 22(5), pages 2075-2102, June.
    14. Wang-Sheng Lee & Zhong Zhao, 2017. "Height, Weight and Well-Being for Rural, Urban and Migrant Workers in China," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 132(1), pages 117-136, May.
    15. Liu, Zhiqiang & Shang, Qingyan, 2012. "Individual well-being in urban China: The role of income expectations," China Economic Review, Elsevier, vol. 23(4), pages 833-849.
    16. Efstratia Arampatzi & Martijn Burger & Spyridon Stavropoulos & Louis Tay, 2020. "The Role of Positive Expectations for Resilience to Adverse Events: Subjective Well-Being Before, During and After the Greek Bailout Referendum," Journal of Happiness Studies, Springer, vol. 21(3), pages 965-995, March.
    17. Marco Bertoni & Luca Corazzini, 2015. "Life Satisfaction and Endogenous Aspirations," SOEPpapers on Multidisciplinary Panel Data Research 761, DIW Berlin, The German Socio-Economic Panel (SOEP).
    18. Chang Wen-Chun, 2008. "Toward Independence or Unification?," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 13(2), pages 124-153, January.
    19. Akay, Alpaslan & Bargain, Olivier B. & Giulietti, Corrado & Robalino, Juan D. & Zimmermann, Klaus F., 2016. "Remittances and relative concerns in rural China," China Economic Review, Elsevier, vol. 37(C), pages 191-207.
    20. Bruno S. Frey & Matthias Benz, 2004. "From Imperialism to Inspiration: A Survey of Economics and Psychology," Chapters, in: John B. Davis & Alain Marciano & Jochen Runde (ed.), The Elgar Companion To Economics and Philosophy, chapter 4, Edward Elgar Publishing.

    More about this item

    Keywords

    Expectations; Happiness; Consumption and Savings; China; Political Economy;
    All these keywords.

    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:qut:auncer:2008-26. 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: School of Economics and Finance (email available below). General contact details of provider: https://edirc.repec.org/data/ncerrau.html .

    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.