Why The Chinese Are Getting Richer But Not Happier

The rapidly developing Chinese economy has a hard lesson to teach developed nations about the happiness of the majority.

We all have an intuitive sense that the society we live in has a huge effect on our lives. It’s almost impossible not be influenced by the way other people treat us, the values they hold and the way they behave.

But because we are so used to these effects they become subliminal, automatic – they’re so embedded in our everyday lives that we’re unaware of them. Sometimes it’s only possible to understand our own society by looking at another. One of the most interesting, because of its incredible rate of change, is China.

Data examined in a new study to be published in the Journal of Happiness Studies highlights a striking paradox in the expanding Chinese economy. While the Chinese are getting richer, they don’t seem to be getting happier – in fact they’re getting more unhappy. This paradox may have much to teach other expanding societies about the perils of financial inequality.

China, 1990-2000

In ten years the average rural wage in China more than tripled, while in urban areas it quadrupled.Between 1990 and 2000 the Chinese saw an incredible boom in their economy such that millions were pulled up out of poverty to earn a decent living wage. In ten years the average rural wage in China more than tripled, while in urban areas it quadrupled.

Set against this impressive financial boom is a surprising story coming out of research into Chinese happiness over this decade. In 1990 28% of Chinese people described themselves as very happy, but by 2000 this figure had dropped to 12%. When asked about their satisfaction with life, the story was the same: in 1990 the average was 7.3 (out of 10), but by 2000 it had dropped to 6.5. This drop was seen across rural and urban China and in almost every income bracket.

Money has the biggest positive effect on happiness among the poor.This finding is surprising because it’s the exact opposite of what psychological research on the happiness of societies would predict. Money has the biggest positive effect on happiness among the poor. When you’re already relatively well-off, more money makes less difference.

So what can explain the Chinese experience of decreasing happiness and life satisfaction alongside so many being released from poverty? In a new article Professor Hilke Brockmann from Jacobs University in Bremen, Germany and colleagues argue that the answer largely comes down to an increasing disparity between rich and poor (Brockmann, Delhey, Welzel & Hao, In Press).

In China, like many other societies around the world, the rich have accelerated away from the mean income level rapidly, leaving the rest of society looking on jealously. It’s just that in China it has happened very quickly and so the results are particularly pronounced.

While many Chinese are getting richer in absolute terms, they are not getting richer in relative terms; on the contrary, relatively they feel poorer. As average income levels are pulled higher by the small minority of rich and super-rich, more and more people feel poorer in comparison. As a result they feel less satisfied with life and less happy. This is exactly what seems to have happened in China in the decade between 1990 and 2000.

Alternative explanations

Societies are notoriously difficult to analyse because of their incredible complexity.While this seems like a plausible explanation for the paradox produced by rising income and declining happiness, it is not the only explanation. Societies are notoriously difficult to analyse because of their incredible complexity. Plus, social scientists often have to rely on correlational data which is always open to different interpretations. It’s difficult to really be sure that rising inequalities are actually causing lower average levels of happiness and life satisfaction.

Professor Hilke Brockmann and colleagues, therefore, used the data to examine two other plausible explanations for declining levels of happiness:

Anomie . This is the sociological idea that unhappiness in society is linked to rapid changes which can decrease how much control people feel they have over their own lives. As China has undergone such rapid changes, anomie is a prime candidate for lower levels of happiness. Political disaffection . The Chinese have good reason for political disaffection: corruption is rife, freedom is limited and democracy is denied.

In both 1990 and 2000 people were asked questions which accessed all three possible explanations of declining life satisfaction levels. These possible explanations, along with other factors such as self-rated health, marriage, age and gender, were then statistically compared to assess which factors best predicted people’s satisfaction with life.

The results showed that in both rural and urban China in 1990 financial worries played practically no part in predicting life satisfaction or any of the other measures. In 1990 financial dissatisfaction had little effect on how satisfied people were with life. Life satisfaction was explained by whether people had a partner or how subjectively powerless they felt (a question designed to access anomie).

But by 2000 the picture had changed dramatically with financial dissatisfaction becoming one of the leading predictors of people’s life satisfaction, or rather lack of satisfaction. While subjective powerlessness was still important, no significant changes were seen in this across the decade. This suggests that it really is the change in relative income levels that is causing the decline in people’s satisfaction with life, compared to the other two possible explanations.

Frustrated achievers

Professor Hilke Brockmann and colleagues use the term ‘frustrated achievers’ to describe a huge swathe of Chinese society who are now doing much better in absolute terms. But because their position relative to the average is declining, they feel less satisfied with life.

It is another reminder how, when we think about money, what counts is relativity.This idea of frustrated achievers might also be relevant outside rapidly growing economies like China. In countries where the gap between rich and poor is already large, and still growing, it probably describes large groups of society who look at the rich and wonder what they have done wrong; despite the fact the answer is probably: nothing.

It is another reminder how, when we think about money, what counts is relativity. Humans are hard- (and soft-) wired to be social creatures, we can’t avoid comparing ourselves to others, no matter how hard we try. In societies where the rich are very rich, the relative differences are shoved in our faces. And it never feels good to be reminded we’ve got less than others.

» Read more on the science of happiness.

» Read more on the psychology of money.

[Image credit: Saad Akhtar]

Reference

Brockmann, H., Delhey, J., Welzel, C., Hao, Y. (In Press). The China Puzzle: Falling Happiness in a Rising Economy. Journal of Happiness Studies.