Three Essays on Happiness Economics: Insights from China

This thesis consists of three self-contained empirical papers. They address different topics, but all relate to the economics of happiness within a Chinese context. The first chapter examines whether the publicity of anti-corruption investigations affects individuals’ life satisfaction. It shows that, at the population level, such information is modestly detrimental to citizens’ life satisfaction. More importantly, this effect is significantly moderated by the levels of one’s trust in the government. I show that it is harmful to individuals with low trust, but beneficial for those with high trust. This study thus highlights an unintended consequence of certain government policies: when political trust is low, these efforts may reduce subjective well-being by increasing citizens’ awareness of the social issues, such as corruption, that the policies seek to address.
The second chapter studies the relationship between individual life satisfaction and political trust. Employing an instrumental variables method, I find that life satisfaction has a significant, strong and positive impact on the formation of political trust. I also provide evidence suggesting that political trust matters for regime stability in China. Taken together, my findings imply that, even in authoritarian regimes, governments will have an incentive to improve citizens’ happiness.
The final chapter addresses whether early life adversity impacts the formation of individual resilience. Using a difference-in-difference identification strategy, I find that individuals who experienced extreme starvation in their childhood exhibit a lower reduction in mental well-being when faced with the Covid-19 pandemic. I also find a non-linear relationship between early life adversity and future resilience. Simply put, some adversity appears beneficial for resilience but too much may backfire.