Revisiting the Income-Happiness Paradox: the Case of Taiwan and Malaysia

• Main Authors: Lim, Hock Eam, Diage, Shaw, Liao, Pei-Shan
• Format: Conference or Workshop Item
• Language: English
• Subjects: HB Economic Theory
• Online Access: http://repo.uum.edu.my/25115/1/ECoFi%202016%20179-187.PDF; http://repo.uum.edu.my/25115/

Since the last two decades, economic studies on income-happiness paradox or Easterlin paradox have grown rapidly due to its significant policy implications. However, the paradox is yet to be explored adequately in Taiwan and Malaysia. Using World Values Survey (WVS) data of Taiwan and Malaysia, this paper aims to examine the existence of Easterlin paradox and estimate the drivers of happiness. Overall, the Taiwanese and Malaysians are happy with their life. Nevertheless, Malaysians are found to be happier than Taiwanese. There is no sufficient evidence on the existence of income-happiness paradox in Taiwan and Malaysia. Results of the estimated regression models reveal that income in Taiwan has larger effects on happiness than Malaysia. In Taiwan, an increase of one unit income (i.e., moving up by one decile income group) will increase the odds of being happier by around 30%; in Malaysia, it is around 20%. The drivers of happiness in Malaysia are: income, health status, marital status, employment tatus, religious (these drivers are similar to Taiwan), income equality and materialist (these driven are different from Taiwan). Thus, Taiwan and Malaysia shares a similar and different set of drivers of happiness. Thus, the government policies that to improve the happiness should target at the appropriate drivers of happiness.