Economic Development and Subjective Well-Being. An in-depth study based on VARHS 2012

Transcription

1 Economic Development and Subjective Well-Being An in-depth study based on VARHS 2012

2 Introduction Aim: Understand how the many dimensions of economic development affect happiness/life satisfaction in rural Vietnam Specific focus on the effects of income and occupation, but other factors also considered. Standard economic analyses focus on objective measures of welfare, such as consumption or fulfillment of basic needs. We supplement these analyses by using a subjective measure of welfare, namely self-reported life satisfaction, or happiness.

3 Introduction Happiness has recently attracted a lot of attention from economists, but most studies focus on Western countries. This is the first, systematic study of happiness in Vietnam.

4 Literature on happiness Effect of income on happiness is controversial Deaton (2008) finds that life satisfaction is higher in rich countries than in poor. On the other hand, Easterlin (1974, 2003) and Layard (2006) point out that although income has increased strongly in e.g. the U.S., selfreported happiness is stable. => indicates that relative rather than absolute levels of income matter.

5 Literature on happiness Effects of occupation have been studied less Exception: many studies find negative effect of unemployment. We study effects of wage work vs. self-employment in agriculture or non-agriculture. Expected effect ambiguous: Wage work reduces uncertainty but also leads to loss of autonomy and possibly status. Other studies find that health, age, marital status, shocks and social capital are also important determinants of happiness/life satisfaction.

6 Data VARHS 2012: 2,740 observations. Drawback: only one respondent per household, typically the household head. Advantages: - Cluster-sampling => we can estimate average income in local neighborhood => we can distinguish between effects of absolute and relative income. - Previous survey rounds => we can estimate effect of changes vs. levels of income. - Very information-rich survey => many potential determinants of happiness can be investigated.

7 Happiness "Taking all things together, would you say you are.." Not at all pleased with your life 6% Very pleased with your life 7% Not very pleased with your life 42% Rather pleased with your life 45%

8 Happiness and income Income decile Share "very" or "rather" pleased with life

9 Happiness and main occupation 0.65 Share "very" or "rather" pleased with life Own farm Wage labor HH enterprise CPR collection No occupation

10 Happiness and children Share "very" or "rather" pleased with life or more Number of children below 15 in hh

11 Happiness and marital status 0.6 Share "very" or "rather" pleased with life Married Single, never married Widowed Divorced/separated

12 Happiness and ethnicity Kinh Non-Kinh Share "very" or "rather" pleased with life

13 Happiness and formal networks Share "very" or "rather" pleased with life Communist Party Mass organization Other formal group No formal groups Respondent member of...

14 Happiness and informal networks Share "very" or "rather" pleased with life or more Number of weddings attended in other households

15 Happiness and shocks Share "very" or "rather" pleased with life No shocks Natural disaster Pest infection, crop disease or avian flu Economic shock (price change, unemployment, investment failure or land loss) Household hit by Death, serious illness or injury Other shock

16 Table 1: Determinants of happiness Dependent variable: Happiness (four categories) Income per hh member, log 0.433** 0.392*** 0.476*** 0.474*** [0.038] [0.040] [0.048] [0.077] Median commune income per capita, log * * ** << [0.069] [0.073] [0.077] [0.168] Change in log income per cap, *** *** [0.036] [0.058] Main occupation Wage worker ** *** *** *** [0.052] [0.060] [0.067] [0.096] Non-farm enterprise *** *** *** [0.075] [0.083] [0.092] [0.119] CPR collection [0.179] [0.167] [0.204] [0.317] None [0.072] [0.079] [0.086] [0.130] Control variables No No Yes Yes Yes

17 Table 1: Determinants of happiness, continued Landless [0.084] [0.105] [0.153] Female [0.073] [0.081] [0.123] Age in year *** *** [0.011] [0.013] [0.021] Age squared/ *** 0.394*** [0.098] [0.120] [0.188] Years of schooling, ln(x+1) 0.112*** 0.121*** 0.252*** [0.042] [0.044] [0.095] Children below 15, ln(x+1) [0.050] [0.057] [0.091] Marital status Never married * * [0.123] [0.144] [0.197] Widowed *** *** ** [0.087] [0.094] [0.134] Divorced or separated *** *** [0.207] [0.246] [0.440] Kinh ** [0.112] [0.118] [0.195]

18 Table 1 : Determinants of happiness, continued Member of Communist Party 0.528*** 0.487*** 0.576*** [0.099] [0.117] [0.214] Member of Mass Organization 0.174*** 0.167*** [0.057] [0.064] [0.119] Member of group other than party, mass org 0.148* [0.077] [0.083] [0.121] Weddings attended in other hh, log(x+1) 0.138*** 0.117** [0.040] [0.046] [0.073] Shocks to hh in last two years Natural disaster [0.084] [0.089] [0.160] Pest infection, crop disease or avian flu [0.057] [0.062] [0.102] Economic (unemployment, loss of land etc.) ** ** ** [0.097] [0.105] [0.185] Illness *** *** [0.083] [0.092] [0.141] Other shock [0.209] [0.249] [0.521]

19 Table 1 : Determinants of happiness, continued Days unable to work due to illness in last year, log(x+1) *** *** [0.019] [0.021] [0.032] Head born in commune 0.109* 0.141** [0.059] [0.064] [0.106] Hh member migrated [0.072] [0.077] [0.129] Hh member migrated 0.149* 0.157* 0.234* [0.079] [0.085] [0.135] Hh head [0.088] [0.098] [0.135] Province dummies Yes Yes Yes Yes Yes Observations 2,594 2,680 2,534 2, Note: Ordered probit regressions. Standard errors adjusted for clustering at the village level. Regression 4 and 5 include only hh interviewed in both 2010 and Regression 5 includes only observations from communes with at least 10 observations.* significant at 10%; ** significant at 5%; *** significant at 1%

20 Table 2: Occupation and happiness Dependent variable: Happiness (four categories) Age<49 Age>=49 Main occupation Wage worker *** *** [0.085] [0.106] Unskilled wage worker *** [0.072] Skilled wage worker *** [0.084] Private sector wage worker *** [0.064] Public sector wage worker * [0.118] SOE wage worker [0.250] Wage worker in: Agriculture ** [0.135] Mining [0.341] Manufacturing *** [0.123] Construction *** [0.093] Services *** [0.091] Province dummies Yes Yes Yes Yes Yes Control variables As in Tab. As in Tab. As in Tab. As in Tab. As in Tab.

21 Conclusions Income a strong determinant of happiness. But relative income may be more important than absolute. Controlling for level of income, recent income growth has a negative effect on happiness. Holding income constant, workers on own farms are more happy than wage workers and non-farm enterprise operators. Party members are much happier than others. Age, marital status, networks and shocks are also important determinants of happiness.

22 Conclusions Results are remarkably similar to those from rich, Western countries, for example for income, age, health, schooling, marital status and social networks. Implication: The values of farmers in rural Vietnam are not radically different from those of people in the streets of Copenhagen or New York. Our core values are not Western or Eastern, traditional or modern, but universal.