By Cheng Yu & Ruan Rongping

Research Report Vol.18 No.6, 2016

In order to have a comprehensive knowledge of urban and rural residents’ life and keep track of their life satisfaction, “China Livelihood Survey” project team of the Development Research Center of the State Council carried out household survey in Anhui, Zhejiang, Guangdong, Hebei, Heilongjiang, Shaanxi, Sichuan, and Jiangsu provinces in 2015, with a total of 12,714 valid questionnaires. Based on the results, due to downward economic growth, respondents’ living standards are improved more slowly and the proportion of people very satisfied with their life drops, with income and employment as the major two unsatisfactory aspects.

I. Respondents’ Dissatisfaction with Income and Employment

In 2015, a total of 64.03% of the respondents are very satisfied and somewhat satisfied with their lives. While the results in 2014 survey show a more central tendency of life satisfaction, the respondents who are very satisfied with life or very dissatisfied with life drop by 1.61 percentage points and 0.91 percentage points, respectively. Except that 28.75% of the respondents report that they are very satisfied with life, among the rest respondents¹, 43.01% and 11.15% of them think that income and employment are the most unsatisfactory, respectively, with the total reaching 54.16%.

The proportions of respondents in rural, suburban or urban areas most dissatisfied with income are the highest. But when it comes to employment, urban and suburban residents rank it the fourth most unsatisfactory, while rural residents rank it the third, with a proportion of 11.91%, 1.26 percentage points and 1.38 percentage points higher than that of urban and suburban residents, respectively.

II. Income Effect on Life Satisfaction

The academia calls the relationship between income and life satisfaction “Easterlin Paradox” which says when a nation gets richer, people are not happier generally. This paradox is also known as “happiness-income mystery”. One explanation is that life satisfaction is not only affected by absolute income but also by relative income. Results of the survey show that life satisfaction is affected by absolute level, longitudinal changes, cross-sectional gap of income as well as respondents’ income class.

1. Respondents with higher income are more satisfied with life.

Absolute income has a significantly positive effect on life satisfaction. The scores² of respondents with household income less than 10,000 yuan, from 10,000 to 30,000 yuan, from 30,000 to 50,000 yuan, from 50,000 to 80,000 yuan, from 80,000 to 10,0000 yuan, from 100,000 to 150,000 yuan, from 150,000 to 250,000 yuan, from 250,000 to 500,000 yuan, and 500,000 yuan or more are 62.11, 66.00, 69.76, 73.86, 77.17, 79.91, 83.82, 88.33, and 92.63, respectively. Respondents with an annual income of over 500,000 yuan who are satisfied with life are 49% more than those with an annual income of less than 10,000 yuan. Regionally speaking, with increasing household income, urban respondents are more satisfied with life while the level of satisfaction grows slower. Life satisfaction of suburban residents rises amid fluctuations. For rural respondents, life satisfaction starts to go down when their annual household income exceeds 500,000 yuan (see Figure 1).

2. Self-perceived income class has a great effect on life satisfaction.

Absolute income does not accurately reflect respondents’ actual sense of gain. Data analysis shows respondents’ self-judgment of household income class in the local society is related to their absolute income, but not the same. Some 35.75% and 20.24% of the respondents with an annual household income from 10,000 to 80,000 yuan report they belong to lower-middle or lower class in the local society, but 3.57% and 40.27% consider themselves upper-middle or middle class. As for respondents with an annual household income from 80,000 to 500,000 yuan, 16.38% and 55.90% feel that they belong to upper-middle or middle class, but 20.53% and 5.42% believe they are lower-middle or lower class, respectively. Respondents’ self-perceived income class in the local society is more related to their levels of life satisfaction. In 2015, the proportions of respondents who think they belong to upper, upper-middle, middle, lower-middle, and lower class are 0.73%, 7.53%, 44.91%, 31.09%, and 15.74% respectively, with life satisfaction scoring 84.51 points, 78.98 points, 71.51 points, 60.52 points and 48.11 points (see Figure 2). Compared with 2014, respondents with low income have a higher life satisfaction score, up by 1.83 points, showing that their life satisfaction, though low, is rising.

3. Respondents with decreasing household income have much less life satisfaction

As shown in Figure 3, respondents with a much lower income than last year have a life satisfaction score of 61.14, while the scores of respondents with lower income, the same income, higher income, and much higher income are 67.05, 72.38, 79.07 and 84.02, respectively. It can be clearly seen that life satisfaction increases with income. Respondents with a much higher income are 37.42% higher than those with a much lower income. Remarkably more low-income households witness declining income, which makes them more dissatisfied with their lives. Respondents with income less than 30,000 yuan who suffer from little reduction and much reduction of income add up to 32.84%, 6.67 percentage points higher than those with income over 30,000 yuan. And their score of life satisfaction is only 47.78 points.

4. Income gap has a significant negative effect on life satisfaction.

As shown in Figure 4, the more respondents think their income is close to their neighbors’ in the community, the more life satisfaction they have. That is to say, respondents’ life satisfaction increases as their self-perceived income gap narrows. The life satisfaction score of those who think their income is close to the local level is 28.53% higher than that of respondents believing their income is far lower than the local level. Income gap can not only affect life satisfaction of low-income groups but also that of high-income groups. Even for respondents with an annual household income of over 150,000 yuan, the life satisfaction score of those who think their income is nearly the average is 10.65% higher than that of those believing a big gap between theirs and the average level. ...

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