Is There An Income-Happiness Puzzle in China? A National Survey, 2003-2021

This study investigates the income-happiness puzzle in China by examining the trends in happiness and economic growth over the past two decades. It is the first long-term study in China to utilize a consistent national representative survey in the new century. Using data from the Chinese General Social Survey (CGSS) waves 2003-2021, the study reveals a substantial increase in average happiness alongside steady income growth. Income growth contributes to approximately 40% of rural residents’ happiness improvement and 25% of that of urban residents during this period. I find the effect of income is positive and robust when examined using both regional aggregate data and individual data. Furthermore, the study finds that the effect of relative income, measured by local average income, does not have a significant impact on individual happiness. The research also highlights the persistent urban-rural happiness gap and explores the distinct happiness-age curves observed between urban and rural residents