The Influence of Income and Social Capital on the Subjective Well-Being of Elderly Chinese People, Based on a Panel Survey

China has undergone many economic changes in the past four decades, and has seen an imbalance in economic development between rural and urban regions. Meanwhile, it also has an aging population. Using panel data on 3590 elderly residents aged between 60 and 95 in 28 provinces in China in 2015, this study explored older adults' subjective well-being in terms of income, relative income, and social capital. The ordinary least square (OLS) regression results showed that the effect of actual income on subjective well-being was weak, and relative income and social capital had a significant effect on the happiness of urban and rural residents; however, there were substantial differences between urban and rural areas associated with economic inequality, social context, social security, and demographic characteristics. Expanding income inequality is contributing to decreased happiness of the rural elderly, while higher social trust and social interaction mitigate this negative influence. This paper also verified that relative income has a mediating or moderating effect on income and the subjective well-being of urban and rural elderly people. The evidence indicates that the Chinese government should pay more attention to reducing the income gap between and within urban and rural groups, and take advantage of social capital to improve the subjective well-being of the elderly population.