A Research On The Relationship Between Income And Subjective Well-Being Of Chinese Residents

In the recent decades, foreign economists' interests on subjective well-being have increased much. Researches on happiness have challenged on traditional economic theory and achieved many noticeable outcomes. However, economists in China have done very few researches on this important issue. For the purpose of making some contributions on the researches of subjective well-being, this paper did some empirical researches on the relationship between income and subjective well-being of Chinese residents.Before formal analysis, this paper discussed the concept of "happiness" .The purpose of this discussion is to show what kind of meaning of this term was accepted in this paper. In this paper, happiness refers to subjective well-being. This definition was accepted by most researchers of happiness; it can be understood by common people and shows the essence of "happiness", and people seek to get it. Under this definition, scientists researching happiness have achieved many noticeable results. Then, this paper discussed the issue of the measurement of subjective well-being and pointed that existing methods of measuring subjective well-being is reliable and valid. Then, the descriptive statistics of the data of China shows that the "paradox of happiness" also existed in China, just as it was common in the West. So, it is necessary to research the relationship between income and happiness of Chinese residents.The data of this paper mainly come from "China General Social Survey (CGSS)". The main method of this paper is that of econometrics. Moreover, this paper used some methods of experimental economics. The results of both methods can be compared each other, so the results will be more persuasive than just using one method.The research of the relationship between absolute income and subjective well-being indicated that absolute income has a statistically prominent impact on the subjective well-being of Chinese residents though the degree of the impact is very slight. Moreover, the increase of absolute income can not always promote the degree of happiness. If absolute income rises beyond some cut point, its increase will not give raise to a higher degree of happiness. Furthermore, absolute income has different impacts to residents of different income level. The impact of absolute income to happiness is much larger to residents whose income is below poverty line than those above poverty line.The research of the relationship between relative income and subjective well-being indicated that when thinking of the effect of relative income, the impact of absolute income will be lower. However, the effect of relative income was different with different reference group of income. So, relative income theory can not give a complete explanation to the "paradox of happiness" of China. This conclusion was validated by the survey-experimental research of this paper.The research of the relationship between regionally general income level and subjective well-being indicated that there is no prominent relationship between general income level and happiness of the residents. However, both the rate of economic growth and income distribution has prominent impact on happiness.The policy implication of this paper is important. First, as the absolute income of common Chinese residents is still very low, it is important for the government to increase the income level of the residents to increase the happiness level. Second, when the income level exceeds the cut point income, the government should pay more attention to things other than absolute income. Third, a more equalized income distribution policy will raise the level of happiness of residents.