Income, Insurance, and Happiness in China: Evidence from CHIP2013

Abstract: By using the data from China Household Income Project 2013 (CHIP2013), an empirical analysis is made on the relationship among income, insurance and subjectively reported well-being (SWB) of Chinese people. The ordered logit model esimates suggest that both income and insurances relate to SWB positively. Specifically, except medical insurance, the four social insurance types, i.,e., pension, work injury, unemployment, and maternity insurance, are positively associated with SWB while the work injury insurance is more prominent on SWB. Our results suggest that the insurances are statistically significant independent of allowing for actual absolute and relative income. There is also a substantive heterogeneity with respect to socioeconomic groups including rural, urban and immigrants from rural regions. The relationship between insurance and SWB is the weekest among the rural, followed by the migrants, then urban residents, as expected. The coefficient of insureance on SWB of high-income individuals is the largest especially for the work injury insurance while the coefficient of maternity insurance of SWB is the largest among the low-income people’s. There is a distinct difference between the employed and self-employed workers that employed workers concern more on work-related insurance while self-employed people care most about pension insurance. These findings suggest that insurance policies targeted at different groups can be made to raise national happiness. The paper discusses on the implications of our results with respect to welfare and insurance policies.