Asset poverty and happiness in urban China

Abstract

This study examines the association between asset poverty and happiness in urban China. Asset poverty refers to the insufficiency of assets to satisfy basic household needs for a limited period of time, and data come from a 2002 survey conducted as part of the Chinese Household Income Project. The findings suggest that asset poverty is negatively related to happiness. Asset poverty has a greater marginal effect on happiness among low-income households than among those with higher incomes. The association between asset poverty and happiness is partially mediated by precautionary savings, the household living standard, perceived fairness of the income distribution, and predicted future income. The study discusses the implications of the findings for developing asset-building programmes to improve happiness.