Economic Development and Socioeconomic Inequality of Well-Being: A Cross-Sectional Time-Series Analysis of Urban China, 2003-2011

This study examines how economic development influences the effects of socio-economic status (SES, measured with education and income) on individuals' well-being (happiness, self-rated health, and depression) in urban China. Building on Tversky and Griffin's judgment model of well-being, we propose an endowment and a contrast hypothesis for the variation of SES gradients in well-being across economic contexts. Drawing on six waves of the Chinese General Social Survey (CGSS 2003, 2005, 2006, 2008, 2010, 2011) and allowing for non-linear development effects, we obtain four main findings: (1) the widely observed SES gradients in physical health are confirmed not only for self-rated health (SRH) but also for happiness and depression among urban residents in China. However, the SES gradients are contingent on economic development in two systematic ways; (2) consistent with both theoretical hypotheses, SES gradients in happiness are positive at lower levels of economic development but become negligible and insignificant at the highest level; (3) consistent with the contrast hypothesis, SES gradients in SRH and depression are substantially smaller at the highest level of economic development. Inconsistent with the endowment hypothesis, these SES gradients are also smaller at the lowest level, suggesting that an impoverished environment can significantly limit the endowment effects of SES; and (4) given the broad support for the contrast hypothesis, we further consider its generating mechanism. A preliminary test does not support the role of relative status, as emphasized by Tversky and Griffin. We therefore discuss two alternative theoretical mechanisms.