The Effects of Income on Happiness in East and South Asia: Societal Values Matter?
During the last two decades, economic studies on happiness have grown rapidly in particular, studies on the effect of income on happiness. Ng (Pac Econ Rev 7(1):51–63, 2002) has highlighted the East-Asian happiness gap. The East Asian countries, China, Hong Kong, Taiwan, Korea, Japan, Singapore, are performing well economically, however, performing poorly in happiness. Societal values have been suggested to be the potential explanation of this happiness gap. Nevertheless, the effects of societal values on happiness are yet to be explored fully. This paper aims to estimate the effect of income on happiness and examine the moderating effect of societal values in the context of the East-Asian happiness gap using the World Values Survey (WVS) data. The WVS (waves 6, 2010–2014) consists of nationally representative sample of 14,447 respondents from the various East and South Asian countries. It provides measurements of societal values, subjective well-being and other socio-demographic variables including income. We found that the effect of income on happiness is the lowest (and insignificant) in Thailand and Philippines; and the highest (and strongly significant) in South Korea and Taiwan. The effect of income becomes insignificant once it is moderated by the societal values. Societal values matter to explain the East-Asian happiness gap and might refute the relevance of Easterlin paradox.
KeywordsEast-Asian happiness gap Societal values Income-happiness effect Easterlin paradox
JEL ClassificationA12 A13
First of all, we would like to thank the financial support of the Taiwan Fellowship Program (Ministry of Foreign Affairs, Republic of China (Taiwan)). We also thank to the World Values Survey Association (WVS) for permission to use its data, the Institute of Economics, Academia Sinica (Taipei, Taiwan), Universiti Utara Malaysia (UUM, Malaysia) and the seminar participants whose comments have improved this paper substantially. Thank is also due to the anonymous referees whose comments have improved this paper substantially.
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