Relative Income and Subjective Well-being of Urban Residents in China.

Abstract

The purposes of this study are to examine subjective well-being and to test its correlation with social reference and self-expectations of urban residents in China. Data are obtained from the 2015 Chinese General Social Survey, and we focus on urban residents (N=4,857). Because the dependent variable is a sequence variable, the ordered logit model is used for data analysis. We find that absolute income remains an important factor in determining people's subjective well-being. We also find that when relative income factors are included, the correlation between absolute income and subjective well-being is reduced. This suggests that the subjective well-being of urban residents is influenced not only by absolute income itself, but also - more importantly - by relative income based on social comparison and self-expectations. These findings have implications for the formulation of social policies to improve citizens' happiness.