Determinants of Happiness in India: Ordered Probit Estimation of Life Satisfaction

ABSTRACT

Background: Maximising happiness of people is truly the proper measure of social and economic progress and the goal of any public policy. The socioeconomic and demographic factors that affect life satisfaction are so varied that many domains of life events influence happiness. Despite significant income growth and achievements in social indicators, India ranks poorly in the happiness rank. Such a disparity is attributed to the attitude of people towards positional and status concerns and the relative comparison of life evaluation. This paper attempts to identify the determinants of happiness and estimate their effect on life satisfaction among individuals in India. Specifically, this paper examines the relationship between income and life satisfaction in India in an attempt to understand whether money matters for happiness. Methodology: This study uses the sixth wave (2010-2014) of World Values Survey data across 12 Indian states. Since the response variable, life satisfaction or happiness, is measured in the WVS as an ordered category in the Likert scale, empirical estimation is based on the ordered probit method. The covariates considered as determinants of happiness in India are gender, social class, marital status, income, health status, employment status, education, number of children, age, and religion. Results: The estimated ordered probit results show that the probability of reporting happiness increases with education, health and social class whereas age, income, employment, children and gender have no statistical effect on happiness in India. Changes in the marginal effects are reported in the case of primary education, health, employment and middle social class. As income changes from high income to low income, people tend to become unhappier. Conclusion: Income, education, health and social status of people are positively associated with life satisfaction. Poor people and individuals in the middle social category are less happy.