@article{d2f6de4b478743a4bef3f82676c0acde,
title = "Income comparison and happiness: The role of fair income distribution",
abstract = "Relative income gap is one of the most popular approaches for explaining the income–happiness relationship. We argue in this article that when people compare their incomes, they care about distributional fairness more than relative income disparity. It is difficult for us to explain China's income–happiness paradox if we simply compare the income gap and do not explore the income-generation process leading to income inequality. We therefore employ an approach based on a responsibility-sensitive theory of justice that decomposes individual income into fair and unfair components. As a proxy for distributional unfairness, unfair income is considered the main source of unhappiness. Using data from the Chinese Household Income Project survey, we find strong support for the negative relationship between income unfairness and happiness. We also find a significantly positive relationship between the relative income gap and income unfairness, which leads us to consider the income comparison hypothesis as the explanation for the income–happiness paradox in a new light. Sensitivity analyses confirm the robustness of our results.",
keywords = "JEL codes I31, D31, D63, J31, fairness, happiness, inequality, relative income, well-being",
author = "Yongwei Chen and Dahai Fu and Xinyue Ye",
note = "Funding Information: Humanity and Social Science Foundation of Ministry of Education of China, Grant/Award Number: 17YJC790014,20YJC790024; National Natural Science Foundation of China, Grant/Award Number: 71773144; CUFE 2020 Youth Talent Project, Grant/Award Number: QYP2007; CUFE First Class Discipline Research Project, Grant/Award Number: GMYL2019008 Funding information Funding Information: Yongwei Chen acknowledges the financial support of National Natural Science Foundation of China (Grant No. 71773144) and Humanity and Social Science Foundation of Ministry of Education of China (Grant No. 17YJC790014). Dahai Fu highly appreciates the financial support from Humanity and Social Science Foundation of Ministry of Education of China (Grant No. 20YJC790024), CUFE 2020 Youth Talent Project (Grant No. QYP2007) and CUFE First Class Discipline Research Project (Grant No. GMYL2019008). We thank participants at the 30th CESA Annual Conference and seminar participants in Zhongnan University of Economics and Law, Central University of Finance and Economics for their helpful comments and the anonymous reviewer for the constructive suggestions. All errors are our own. 1 Funding Information: Yongwei Chen acknowledges the financial support of National Natural Science Foundation of China (Grant No. 71773144) and Humanity and Social Science Foundation of Ministry of Education of China (Grant No. 17YJC790014). Dahai Fu highly appreciates the financial support from Humanity and Social Science Foundation of Ministry of Education of China (Grant No. 20YJC790024), CUFE 2020 Youth Talent Project (Grant No. QYP2007) and CUFE First Class Discipline Research Project (Grant No. GMYL2019008). We thank participants at the 30th CESA Annual Conference and seminar participants in Zhongnan University of Economics and Law, Central University of Finance and Economics for their helpful comments and the anonymous reviewer for the constructive suggestions. All errors are our own. Publisher Copyright: {\textcopyright} 2020 John Wiley & Sons Australia, Ltd",
year = "2021",
month = mar,
doi = "10.1111/1467-8454.12193",
language = "English (US)",
volume = "60",
pages = "41--63",
journal = "Australian Economic Papers",
issn = "0004-900X",
publisher = "Wiley-Blackwell",
number = "1",
}