Stanford University

Xu Xu | How Digital Surveillance Justifies Massive Lockdowns in China During COVID-19

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SCCEI Seminar Series (Fall 2023)


Friday, November 17, 2023 | 12:00 pm -1:20 pm Pacific Time
Goldman Room E409, Encina Hall, 616 Jane Stanford Way

How Digital Surveillance Justifies Massive Lockdowns in China During COVID-19
 

China’s draconian response to COVID-19 drew considerable criticism, with many suggesting that intense digital surveillance and harsh lockdowns triggered the unusual public dissent seen in China in late 2022. However, we argue that rather than backfiring, digital surveillance may have legitimized the government’s overreaction by making uncertain threats appear certain. We collected data on daily counts of lockdown communities and COVID cases from 2020 to 2023. Using a difference-in-differences approach with World Value Surveys (China 2012, 2018) and a nationwide online survey in 2023, we show that real-world lockdowns significantly reduced public perception of respect for human rights and trust in the government; however, these effects are moderated by the pervasiveness of COVID surveillance, proxied by cellphone usage. To establish causality, we use a survey experiment to show that digital surveillance indeed increases support for COVID lockdowns by making citizens more likely to believe they are close contacts. In contrast, surveillance cannot justify protest crackdowns. Our findings suggest that uncertainty in threats to public safety may foster support for state surveillance and coercion.

Please register for the event to receive email updates and add it to your calendar. Lunch will be provided.


About the Speaker 
 

Xu Xu headshot

Xu Xu is Assistant Professor of Politics and International Affairs at Princeton University. Xu studies digital authoritarianism, political repression, and the political economy of development, with a regional focus on China. He is currently working on a book entitled Authoritarian Control in the Age of Digital Surveillance. His other ongoing projects examine the political aspects of artificial intelligence, social media propaganda, public opinion on state repression, and state-society relations in China. His work has appeared in the American Journal of Political Science, the Journal of Politics, and the Journal of Law, Economics, and Organization, among other peer-reviewed journals.

He received his Ph.D. in political science from Pennsylvania State University in 2019, and was a postdoctoral fellow at Stanford University from 2020 to 2021.
 


A NOTE ON LOCATION

Please join us in-person in the Goldman Conference Room located within Encina Hall on the 4th floor of the East wing.


Questions? Contact Xinmin Zhao at xinminzhao@stanford.edu
 

Goldman Room E409, Encina Hall

Xu Xu, Assistant Professor of Politics and International Affairs, Princeton University
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Ruixue Jia | Improving Regulation for Innovation: Evidence from China’s Pharmaceutical Industry

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SCCEI Fall Seminar Series 


Friday, October 27, 2023 | 12:00 pm -1:20 pm Pacific Time
Goldman Room E409, Encina Hall, 616 Jane Stanford Way

Improving Regulation for Innovation: Evidence from China’s Pharmaceutical Industry


This study investigates the extent to which improved regulation can foster innovation by analyzing the impact of a major regulatory reform implemented in 2015 on the quantity and quality of innovation in China's pharmaceutical industry. Inspired by regulatory practices in the US, the reform aimed to address application backlogs and reduce administrative waiting time for new drug development. Using data at the drug and firm levels, we uncover three main findings: (1) drug categories experiencing improved approval times witnessed a surge in investigational new drug applications; (2) while there existed little improvement in within-drug innovation quality, the reform stimulated shifts in firm composition, leading to the influx of innovative new firm and enhancing aggregate-level drug innovativeness; and (3) the market recognized the improvement in drug innovation, evidenced by changes in stock prices following new drug registrations. Our findings highlight the important relationship between innovation quantity and quality, influenced by firm composition. They also suggest that emerging markets can enhance their innovation potential by adopting regulatory approaches akin to frontier countries.

Please register for the event to receive email updates and add it to your calendar. Lunch will be provided.


About the Speaker 
 

Headshot of Dr. Ruixue Jia.

Ruixue Jia is an Associate Professor of Economics at the School of Global Policy and Strategy, UC San Diego. Her research interests lie at the intersection of economics, history, and politics. One area of her research examines elite formation and its influence, both in historical and contemporary contexts. Another focus of her work is uncovering the deep historical origins of economic development. In recent years, she has studied the ongoing transformation of China's manufacturing sector and expanded her research to encompass labor and technology-related issues.

Jia is affiliated with BREAD, CESifo, CEPR, and NBER. She also serves as the co-director of UCSD's China Data Lab, which aims to lead China studies into a new era where contextual knowledge is tested and corroborated by social science methods and data.


A NOTE ON LOCATION

Please join us in-person in the Goldman Conference Room located within Encina Hall on the 4th floor of the East wing.


Questions? Contact Xinmin Zhao at xinminzhao@stanford.edu
 

Goldman Room E409, Encina Hall

Ruixue Jia, Associate Professor of Economics, UC San Diego
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Jie Bai | Quid Pro Quo, Knowledge Spillover, and Industrial Quality Upgrading: Evidence from the Chinese Auto Industry

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SCCEI Seminar Series (Fall 2023)


Friday, October 13, 2023 | 12:00 pm -1:20 pm Pacific Time
Goldman Room E409, Encina Hall, 616 Jane Stanford Way

Quid Pro Quo, Knowledge Spillover, and Industrial Quality Upgrading: Evidence from the Chinese Auto Industry


This paper studies the impact of foreign direct investment (FDI) via quid pro quo (technology for market access) in facilitating knowledge spillover and quality upgrades. Our context is the Chinese automobile industry, where foreign automakers are required to set up joint ventures (the quid) with domestic automakers in return for market access (the quo). The identification strategy exploits a unique dataset of detailed vehicle quality measures along multiple dimensions and relies on within-product quality variation across dimensions. We show that affiliated domestic automakers, compared to their nonaffiliated counterparts, adopt more similar quality strengths of their joint venture partners. Quid pro quo generates knowledge spillover to affiliated domestic automakers in addition to any industry-wide spillover. We rule out alternative explanations involving endogenous joint venture network formation, overlapping customer bases, or direct technology transfer via market transactions. Analyses leveraging additional micro datasets on worker flows and upstream suppliers demonstrate that labor mobility and supplier networks are important channels mediating knowledge spillover. Finally, we estimate an equilibrium model for the auto industry and quantify the impact of quid-pro-quo-induced  quality upgrading on domestic sales and profits. Quid pro quo improved the quality of affiliated domestic models by 3.8-12.7% and raised their sales (profit) by 0.9-3.9% (1.02-3.49%) relative to unrestricted FDI.

Please register for the event to receive email updates and add it to your calendar. Lunch will be provided.


About the Speaker 
 

Jie Bai headshot

Jie Bai is an Assistant Professor in Public Policy at Harvard Kennedy School. Her research lies at the intersection between development, trade and industrial organization, focusing on microeconomic issues of firms in developing countries and emerging markets. Her past projects have examined firms’ incentive and ability to build a reputation for quality, collective reputational forces in export markets, the relationship between firm growth and corruption, and the impact of internal trade barriers among Chinese provinces on firms' export behavior. Her current ongoing work includes studying growth and reputation dynamics in online markets, technology transfer and knowledge spillovers among firms, and quality incentives and upgrading along supply chains. Professor Bai received her Ph.D. in Economics from Massachusetts Institute of Technology in June 2016 and spent one year at Microsoft Research New England prior to joining Harvard Kennedy School.


A NOTE ON LOCATION

Please join us in-person in the Goldman Conference Room located within Encina Hall on the 4th floor of the East wing.


Questions? Contact Xinmin Zhao at xinminzhao@stanford.edu
 

Goldman Room E409, Encina Hall

Jie Bai, Assistant Professor in Public Policy, Harvard Kennedy School
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Junyan Jiang | From Kins to Comrades: Rural Clan Society and the Rise of Communism in China

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SCCEI Seminar Series (Fall 2023)


Friday, September 29, 2023 | 12:00 pm -1:20 pm Pacific Time
Goldman Room E409, Encina Hall, 616 Jane Stanford Way

From Kins to Comrades: Rural Clan Society and the Rise of Communism in China


A key paradox of social revolutions is that despite their radical, modernist claims, success often requires effective mobilization of the peasantry, who are typically conservative and inward-looking. This article studies how traditional institutions of rural society can help movement entrepreneurs mobilize a modern revolution. Using newly digitized data on over 54,000 family genealogies and 500,000 revolutionary martyrs from 637 uprisings nationwide, we examine the role of clan and kinship networks during the incipient stage of the Chinese Communist Revolution (1927--1936). Triple-difference estimates suggest that local organizers mobilized significantly more co-clan members to join uprisings than non-co-clans. Furthermore, we provide evidence that the characteristics of organizers’ clans and the local clan structure are among the most decisive factors in predicting uprising occurrence and outcome. These findings highlight the subtle yet significant linkage between agrarian institutions and modern revolutions and offer a new perspective on the origin of Chinese communism.

Please register for the event to receive email updates and add it to your calendar. Lunch will be provided.


About the Speaker  
 

Junyan Jiang headshot.

Junyan Jiang is the Assistant Professor of Political Science at Columbia University. Professor Jiang studies comparative politics and political economy, focusing on the politics of elites, organizations, and ideas. Some of his current research projects explore the formation and transformation of political elite networks in China, the interplay between formal rules and informal power in bureaucratic systems, and the dynamics of ideology in changing societies. His work has been published in American Journal of Political Science, British Journal of Political Science, Journal of Politics, Journal of Public Economics, Journal of Development Economics, and World Politics, among others. He has received the 2020 Gregory Luebbert Article Award for the best article in comparative politics from the American Political Science Association (APSA), and honorable mentions for the 2016 Sage Paper Award for the best paper presented at APSA Annual Meetings and the 2018 Mancur Olson Award for the best dissertation in political economy.


 

A NOTE ON LOCATION

Please join us in-person in the Goldman Conference Room located within Encina Hall on the 4th floor of the East wing.


Questions? Contact Xinmin Zhao at xinminzhao@stanford.edu
 

Goldman Room E409, Encina Hall

Junyan Jiang, Assistant Professor of Political Science, Columbia University
Seminars
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"Measurement Problems: China's GDP Growth Data and Potential Proxies": A Big Data China Event

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The event will be webcast live from this page.

In this event on July 5 at 6 a.m. PT / 9 a.m. ET, the Stanford Center on China’s Economy and Institutions (SCCEI) and the CSIS Trustee Chair in Chinese Business and Economics present their latest Big Data China publication. The feature evaluates the efficacy of China’s official GDP growth data and potential alternative proxies. Based on interviews with over a dozen economists and collection of a wide assortment of data, the feature’s authors, Trustee Chair Scott Kennedy and Research Associate Maya Mei, find that although there is substantial skepticism about China’s official data, the majority of experts believe that proper analysis of China’s economic growth trajectory requires consideration of both the official data and a wide range of other metrics.

Following a brief presentation of the feature’s core findings, there will be a roundtable discussion about the pros and cons of the official data and various proxies. Panelists will include Daniel Rosen of the Rhodium Group, Anne Stevenson-Yang of J Capital Research, and Yao Yang of Peking University.

FEATURING

Scott Kennedy 
Senior Adviser and Trustee Chair in Chinese Business and Economics		Maya Mei 
Research Associate, Trustee Chair in Chinese Business and Economics
Daniel Rosen 
Senior Associate, Trustee Chair in Chinese Business and Economics		Scott Rozelle 
Co-director, Stanford Center on China's Economy and Institutions
Anne Stevenson-Yang 
Managing Principal, J Capital Research		Yao Yang 
Dean, National School of Development, Peking University

EVENT PARTNERS
 

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Virtual Livestream 

Scott Kennedy
Maya Mei
Daniel Rosen

Scott Rozelle

Encina Hall East, E404
Stanford, CA 94305-6055

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Faculty Co-director of the Stanford Center on China's Economy and Institutions
Helen F. Farnsworth Endowed Professorship
Senior Fellow at the Freeman Spogli Institute for International Studies
Senior Fellow at the Stanford Institute for Economic Policy Research
Director of the Rural Education Action Program, Stanford Center on China's Economy and Institutions
scott_rozelle_new_headshot.jpeg PhD

Scott Rozelle is the Helen F. Farnsworth Senior Fellow at the Freeman Spogli Institute for International Studies and Stanford Institute for Economic Policy Research at Stanford University. He received his BS from the University of California, Berkeley, and his MS and PhD from Cornell University. Previously, Rozelle was a professor at the University of California, Davis and an assistant professor in Stanford’s Food Research Institute and department of economics. He currently is a member of several organizations, including the American Economics Association, the International Association for Agricultural Economists, and the Association for Asian Studies. Rozelle also serves on the editorial boards of Economic Development and Cultural Change, Agricultural Economics, the Australian Journal of Agricultural and Resource Economics, and the China Economic Review.

His research focuses almost exclusively on China and is concerned with: agricultural policy, including the supply, demand, and trade in agricultural projects; the emergence and evolution of markets and other economic institutions in the transition process and their implications for equity and efficiency; and the economics of poverty and inequality, with an emphasis on rural education, health and nutrition.

Rozelle's papers have been published in top academic journals, including Science, Nature, American Economic Review, and the Journal of Economic Literature. His book, Invisible China: How the Urban-Rural Divide Threatens China’s Rise, was published in 2020 by The University of Chicago Press. He is fluent in Chinese and has established a research program in which he has close working ties with several Chinese collaborators and policymakers. For the past 20 years, Rozelle has been the chair of the International Advisory Board of the Center for Chinese Agricultural Policy; a co-director of the University of California's Agricultural Issues Center; and a member of Stanford's Walter H. Shorenstein Asia-Pacific Research Center and the Center on Food Security and the Environment.

In recognition of his outstanding achievements, Rozelle has received numerous honors and awards, including the Friendship Award in 2008, the highest award given to a non-Chinese by the Premier; and the National Science and Technology Collaboration Award in 2009 for scientific achievement in collaborative research.

Stanford Center on China’s Economy and Institutions

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Faculty affiliate at the Center on Democracy, Development, and the Rule of Law
Faculty Affiliate at the Walter H. Shorenstein Asia-Pacific Research Center
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Panel Discussions

Early Parental Training to Foster Human Capital in Developing Countries

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One out of every three children under the age of 5 in developing countries lives in an environment that impedes human capital development. Children growing up in resource-poor settings are at an increased risk of early developmental delay due to risk factors such as being in environments that lack cognitive stimulation, nutrition, or care in the home environment. Given that early developmental deficits are difficult to reverse later in life, such deficits are key drivers of inequality and impediments for intergenerational mobility. This policy brief reviews this problem and then proposes a design of cost-effective, scalable, and sustainable parental training programs (focusing on psychosocial stimulation for young children) as a global strategy to improve the developmental opportunities of children before they reach the age of 5 in developing countries, to remediate social inequalities, and to boost long-term economic development. We present concrete policy recommendations for the implementation of such programs at scale.

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Think 7 Japan 2023 Policy Paper
Authors
Scott Rozelle

2023 China Business Conference: Washington’s View of China

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Matthew Boswell
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As part of SCCEI’s effort to build bridges between empirical China scholars in academia and China policy experts, SCCEI’s Impact Team attended the 13th Annual China Business Conference held in Washington, D.C. from May 9-10, 2023. Co-hosted by the U.S. Chamber of Commerce and the American Chamber of Commerce in Beijing, the conference has evolved into a critical platform for U.S. government officials, corporate leaders, and policy experts to explore and debate the dynamics of U.S.-China relations.

Washington DC capital building

The conference convened an impressive mix of attendees, including senior officials from the Departments of State and Commerce, the Office of the U.S. Trade Representative, Senators and Representatives central to shaping China policy in Congress, executives from multinational companies, and influential members of the beltway China-watching community. Dozens of panelists drawn from these ranks discussed a wide spectrum of issues facing the troubled U.S.-China relationship.

Several panelists expressed pessimism regarding China’s macro-economic outlook.  There was skepticism regarding the depth and durability of China's economic recovery in the post-Zero Covid era. Experts voiced concerns over the robustness of the recovery, casting doubt on whether it can be sustained over the long term. Furthermore, the debates pointed to an increasing consensus on the likelihood of a structural slowdown in China's growth.

Concerns were raised about the worsening climate for policy debate within China. There was reference to an uptick in reactionary policies and emerging "policy schizophrenia" from Beijing, leading to a less predictable policy environment. Panelists noted the mounting pressure for businesses operating in China to align with Beijing's political priorities, which may complicate the operating environment for foreign enterprises. There was a consensus that China's leadership is showing an increased willingness to take risks.

In the discussions centered on U.S. business in China, numerous challenges were highlighted. Regulatory uncertainties, the declining role of businesses in stabilizing U.S.-China relations, and mixed sentiments about the cost-benefit analysis of operating in China took center stage. Despite these hurdles, panelists emphasized the critical role of personal contacts and talent acquisition in navigating this complex landscape. They highlighted the need for U.S. companies to remain engaged in China, stressing the opportunities to learn from innovative Chinese companies, and the importance of success in the Chinese market for global competitiveness in certain sectors. Scenario planning around supply chain risks, market dependency risks, and U.S.-China regulatory uncertainties were advised.

Discussions on geopolitical risk also extended to the sensitive issue of Taiwan. There was a consensus among panelists about the imperative for the U.S. to avoid armed conflict with China and to establish guardrails around this increasingly contentious relationship. A defense department official reiterated US administration’s assessment that military conflict over Taiwan was not imminent or inevitable. In addition, some panelists also encouraged the U.S. administration to provide explicit assurances to Beijing that the U.S. does not support Taiwan independence and is willing to accept any outcome on Taiwan that is arrived at peacefully and that aligns with the interests of the people of Taiwan.

Members of Congress in attendance cited the need for "reciprocity" in relations with China and a collective "awakening" across the policy community to the troubling aspects of China's rise. They also explored the potential for including education, skills training, immigration reforms, and energy and military development in future legislation to bolster the U.S.'s competitiveness vis-à-vis China. Panelists deliberated on the possibility of new policy mechanisms, including an impending outbound investment screening regimen and additional tech export controls. Several panelists also cautioned against wholesale decoupling or US actions that would reinforce perceptions in China that relations are irreparable.

The business and policy making communities are both key audiences for the SCCEI Impact products, and the impact team participates in these events to contribute to and learn from debates among these leading stakeholders in the U.S.-China relationship. These conversations and exchanges of ideas facilitate a rich understanding of the dynamics at play, ensuring that the SCCEI's work remains informed, relevant, and impactful in informing discussions about China and the U.S.-China relationship.


Learn more about SCCEI Impact.

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Sunset view of high rises in Beijing, China.
News

A Big Data China Event: “How Private Are Chinese Companies?”

Hosted in collaboration with the CSIS Trustee Chair in Chinese Business and Economics, this Big Data China event provided an overview of the latest data-driven research evaluating the influence of China’s party-state on China’s companies and their ability to maintain autonomy.
A Big Data China Event: “How Private Are Chinese Companies?”
Marc Tessier-Lavigne gives opening remarks at the 2023 Stanford Asia Economic Forum in Singapore.
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Stanford Asia Economic Forum Convenes to Explore “Our Shared Future”

Stanford alumni, faculty, and industry leaders met in Singapore to promote the exchange of ideas and mutual understanding between the U.S. and Asia
Stanford Asia Economic Forum Convenes to Explore “Our Shared Future”
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Experts Convene Roundtable to Discuss China’s Industrial Policy

The Stanford Center on China’s Economy and Institutions and Asia Society Policy Institute’s Center for China Analysis co-organized a closed-door roundtable on the scope, impact, and implications of China’s industrial policy and produced a summary report of the discussion.
Experts Convene Roundtable to Discuss China’s Industrial Policy
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SCCEI’s Impact Team attended the 13th Annual China Business Conference held in Washington, D.C. in May 2023. The team shares insights from the conference on issues raised surrounding the troubled U.S.-China relationship.

SCCEI Awards Stanford Graduate Students with Funding to Aid 2023 Summer Research

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Heather Rahimi
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This summer eight Stanford graduate students will advance their empirical research on China with financial support from the Stanford Center China’s Economy and Institutions (SCCEI).

One of SCCEI’s foundational pillars is to serve as a hub for Stanford students interested in China, providing mentorship, support, and opportunities for engagement that deepen their understanding of issues and possible solutions to the challenges of China’s economic development. Since our launch in January 2020 we have continued to grow our student engagement opportunities here on campus through faculty advising, bi-weekly research workshops, course offerings, and specialized academic events. This past spring, SCCEI launched our inaugural call for student research proposals, offering competitive funding to Stanford graduate students and postdoctoral scholars to fund research on contemporary issues related to China’s economy.

After extensive review and discussion, our committee selected eight students to award with funding to pursue their intended research projects. The students will be conducting research on topics spanning several disciplines, including economics, sociology, and political science. We spoke with each awardee to learn more about what they will be researching and why they are passionate about studying China. Here’s what they had to say:  

Matthew DeButts practices Chinese calligraphy.


Matthew DeButts, PhD Candidate in Communication

“China is an internally diverse, commonly misunderstood country with an unmatched dynamism and resiliency. I’m particularly excited to return to China for the first time since the pandemic, and am hopeful that my favorite Beijing coffee shops have survived.” 

Tianhao Hou portrait


Tianhao Hou, PhD Candidate in Sociology

“Little-know social norms, regulations, and rules in superficially chaotic Chinese politics have always fascinated me. This summer I will be investigating the decision making processes and moral judgments of local officials in China, focusing particularly on how morality affects discretion and its implications on state-society interactions.”

Leo Li photo


Leo Li, SPILS Fellow & Doctor of the Science of Law (JSD) Candidate

“I’m excited to pursue research on the Chinese court system, with a focus on the access to justice issues in debt collection lawsuits and the interplay between law and technology.” 

Victoria Liu headshot


Victoria Liu, PhD Candidate in Political Science

“I will be studying the current state of China’s Belt and Road Initiative. I’m planning on interviewing government officials, media staffers, researchers, and private entrepreneurs about their experience with Belt and Road promotion inside China. I hope to learn the political processes through which inward-facing promotion decisions are made, and the relevant interests that play into these decisions.” 

Jason Luo teaching


 Jason Luo, PhD Candidate in Political Science

“I’m motivated by the enduring pursuit of a more prosperous and freer future by the Chinese people and the complex and constantly changing landscapes of Chinese politics. I’m pursuing research on the political economy of information manipulation within autocratic systems, using evidence from China’s government procurement activities."

Xinyao Qiu headshot


Xinyao Qiu, PhD Candidate in Economics

“China has experienced rapid economic growth over the past few decades, but it has also seen a significant increase in education and income inequality. This is why my research investigates whether students from disadvantaged backgrounds face greater informational barriers when making educational choices in China.”

Ni Yan on Stanford campus


Ni Yan, PhD Candidate in Economics

“I’m excited to explore the topics of marriage and birth in Chinese society, given the unique policies China has adopted and surrounding them and the pressing issue of an aging population and decreasing birth rate.” 

Sally Zhang headshot


Sally Zhang, PhD Candidate in Economics

“Rural China provides a unique context with variation in family structures, with some new parents living with the paternal grandparents and some with the maternal grandparents.  My project studies why information can fail to spread within a household. I will be interviewing households in rural China to understand how they learn new information such as how to best care for infants, how they communicate with one another in the household, and how they make decisions together, especially when there is disagreement.”
 

In today’s climate, conducting research in China has become increasingly challenging. SCCEI hopes to provide not only financial support but also mentorship to new scholars breaking into the field of China studies. Several awardees plan to conduct their research on the ground in China this summer, but have hit bureaucratic barriers on both sides of the Pacific. SCCEI is helping these students navigate the system and ever changing requirements so that they too can pursue their research in the field and contribute to SCCEI’s mission to advance public understanding of China’s economy and its impact on the world. We are excited to follow up with all of the student awardees in the fall to hear more about what they were able to achieve this summer.

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SCCEI awarded the following eight Stanford graduate students with research grants: Jason Luo, Sally Zhang, Matthew DeButts, Xinyao Qiu, Ni Yan, Victoria Liu, Leo Li, and Tianhao Hou.
Stanford Center on China's Economy and Institutions
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This summer eight Stanford graduate students will advance their empirical research on China with financial support from the Stanford Center China’s Economy and Institutions.

The Power of History: How Victimization Narrative Shapes National Identity and Public Opinion in China

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We study the effect of a victimization narrative on national identity and public opinion in China experimentally. Previous research has suggested that governments can shape public opinion by guiding citizens’ collective memories of historical events, but few studies have established a clear causal link. By conducting an online survey experiment among 1890 urban Chinese citizens, we examine the causal impact of historical narratives on political attitudes. We find that, compared to control conditions, a narrative focusing on China’s humiliating past in the late Qing significantly reinforces respondents’ attachment to the victim side of the Chinese national identity, raises suspicion of the intention of foreign governments in international disputes, stimulates preference for more hawkish foreign policies, and strengthens support for China’s current political system. These effects are particularly strong among respondents without a college degree.

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Research & Politics
Authors
Yiqing Xu

Twins, Income, and Happiness: Evidence from China

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Significance
One fundamental issue in economic, psychological, and social sciences is whether and how much income truly brings happiness. This paper draws on twins data to examine whether income indeed affects happiness and estimates the size of such an effect. We control for unobserved genetic factors that may impact both income and happiness using identical twins, address measurement error bias, and conduct a series of robustness checks. Income has a much larger effect than previous estimates: doubling income boosts the four-scale happiness value by 0.26 scales or 0.37 SDs. Heterogeneity analyses suggest that income matters most for males and the middle-aged. Our findings emphasize the importance of income maintenance for individuals’ well-being.


Abstract
We estimate the causal effect of income on happiness using a unique dataset of Chinese twins. This allows us to address omitted variable bias and measurement errors. Our findings show that individual income has a large positive effect on happiness, with a doubling of income resulting in an increase of 0.26 scales or 0.37 SDs in the four-scale happiness measure. We also find that income matters most for males and the middle-aged. Our results highlight the importance of accounting for various biases when studying the relationship between socioeconomic status and subjective well-being.

Journal Publisher
Proceedings of the National Academy of Sciences (PNAS)
Authors
Hongbin Li
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