BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 21/2015:
Does consuming more make you happier? Evidence from Chinese panel data
Haining Wang ()
, Zhiming Cheng ()
and Russell Smyth ()
Abstract: This study examines the relationship between consumption
and happiness, using panel data from China Family Panel Studies (CFPS). We
find that total consumption expenditure has a significant and positive
effect on happiness, but we find no evidence of a non-linear relationship
between consumption and happiness. There are heterogeneous effects of
consumption on happiness across subsamples and for different types of
consumption expendi-ture. We find that relative consumption matters,
irrespective if the reference group is defined in terms of consumption at
the community or county level or on the basis of age, education and gender.
However, the extent to which comparison effects are upward looking, or
asymmetric, depend on how the comparison group is defined. We also find
that comparison with one’s past consumption has no significant effect on an
individual’s happiness.
Keywords: happiness; consumption; China; (follow links to similar papers)
JEL-Codes: A13; E21; I31; N35; (follow links to similar papers)
30 pages, July 24, 2015
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