Research on subjective wellbeing across countries suggests that those with higher levels of per capita GDP tend to demonstrate greater satisfaction (Diener and Oishi, 2000; Lora et al., 2009; Sacks et al., 2010). At the same time, it has been found that there is a weak correlation between national wealth and subjective wellbeing: Easterlin (1974)
contends that subjective wellbeing is enhanced in line with rising income only up to a certain point. This indicates that subjective wellbeing in some developing countries is not necessarily low.
Diener and Seligman (2004) argue that economic indicators play an important role in the early stages of economic development when basic needs are yet to be met. However, as society becomes wealthier, factors related to social relationships and job satisfaction rather than monetary wealth tend to grow in importance (ibid). Bjornskov et al. (2008) conclude in their empirical analysis of cross-country data that variables that have been found to significantly affect satisfaction in the existing literature – such as national income, state benefits, unemployment rate, and higher education opportunities – do not necessarily determine perceptions of wellbeing.
Nationally, income tends to positively affect subjective wellbeing, but proportionally similar rises in earnings yield a lower increase in subjective wellbeing at higher income levels (Oswald, 1997; Frey and Stutzer, 2002; Sacks et al., 2010). However, some studies hold that the effect of economic growth on subjective wellbeing is insignificant in general, and may even have a negative influence during periods of rapid development (e.g. Easterlin, 1974; Deaton, 2008).
In the United States and Europe, inflation and unemployment have been shown to adversely affect subjective wellbeing (Di Tella et al., 2001). From an analysis of longitudinal British data, Burchardt (2005) found that those who experienced a fall in income were less satisfied than those who had a constant income; while those who enjoyed pay rises were no more satisfied than those who had a constant income. It may thus be concluded that in some contexts, income does not increase subjective wellbeing beyond a certain level.
Nevertheless, it has been pointed out – mainly in the literature on developed countries – that relative income does play an important role in subjective wellbeing (e.g. Frey and Stutzer, 2002; Van Praag and Ferre-i-Carbonell, 2004). Such a trend is also applicable to developing countries (Graham and Felton, 2006; Jiang et al., 2012).
At the same time, the evidence in the existing literature on the relationship between relative income and subjective wellbeing among poor households in developing countries is inconclusive. Thus, relative income has failed to emerge as a significant determinant of subjective wellbeing among the poor, but this has been found to be the case among the non-poor (Kingdon and Knight, 2006; Ravallion and Lokshin, 2010). In a slightly different vein, it is argued that it is those in the middle-income bracket rather than either the extremely wealthy or poor who are the most dissatisfied (Graham and Pettinato, 2002).
However, relative poverty has been shown to have a negative effect on subjective wellbeing in terms of consumption and basic services even among poor households in which a market-oriented lifestyle is not fully realised (Fafchamps and Shilpi, 2008). The question thus arises as to whether absolute income and/or relative income play any role in subjective wellbeing among low-income households such as those in slums; and if so, how education is related to linkages between income and subjective wellbeing.
It has been pointed out that although income in developing countries has an effect on subjective wellbeing, it is not exclusively associated with it and there are other factors that affect satisfaction levels (e.g. Kingdon and Knight, 2006; Camfield et al., 2009; Knight and Gunatilaka, 2011). In this regard, there has been much less analysis of the effect of education. However, the existing literature suggests that schooling does have a positive influence (Graham and Felton, 2006; Kingdon and Knight, 2006). Moreover, evidence indicates that primary education tends to increase life satisfaction in general, with the exception of those subsisting on extremely low incomes (Bjornskov et al., 2008).
It has also been found that primary education tends to decrease life satisfaction in Bangladesh, while this is not the case in Thailand (Camfield et al., 2009) – the latter being a higher income country than the former. This indicates that education tends to increase subjective wellbeing only after absolute income reaches a certain level. There is an argument that single female household heads with higher education levels tend to
assess themselves as poor due to discrimination in the labour market and fewer opportunities than men for socio-economic mobility (Benfield, 2008). Therefore, it is not clear whether education per se increases subjective wellbeing, or if education in influencing absolute income, relative income, or occupation type, has any effect on subjective wellbeing.
Attempts have been made to account for anomalies in the relationship between income and subjective wellbeing. Some common explanations include the following. Firstly, adaptation – the so-called ‘hedonic treadmill’ – paradoxically operates as a kind of defence mechanism (Brickman and Campbell, 1971 cited in Clark, 2012; Graham, 2011). Thus, subjective wellbeing tends to increase as income rises, but greater affluence is also apt to be accompanied by higher aspirations and expectations, which results in modest subjective wellbeing in wealthier individuals. At the same time, they seem to be unquestioning of the conditions of an adverse environment such as high levels of crime, corruption, poor healthcare, and so forth, finally adapting to this lowering of expectations. This is why poverty or low income does not necessarily translate into a fall in subjective wellbeing.
Secondly, as Kahneman and Tversky’s (1979) prospect theory postulates, the value function is attuned to the gauging of changes or differences rather than absolute magnitudes. Similarly, Graham (2011) summarises set point theory based on the psychology literature. It is argued that subjective wellbeing is actively controlled and maintained by a set of psychological devices that function under the control of one’s personality; and each individual is assumed to have a happiness level that they consistently adhere to over time, even after a major joyful or sorrowful event. In this regard, the level of subjective wellbeing might fluctuate within a narrow range over the short term, but these devices regulate an ultimate return to the original level (Cummins et al., 2003).
Thirdly, Maslow (1954) argues that subjective wellbeing tends to rise as long as attempts at self-actualisation are made. Similarly, subjective wellbeing has been held to depend not on adjustment to circumstances but upon innate biopsychological needs
(Veenhoven, 1991). This implies that income increases subjective wellbeing in as far as it meets psychological or inherent needs.
Fourthly, some commentators place greater emphasis on the cultural and religious beliefs of a particular society (Diener and Oishi, 2000; Camfield et al., 2010). For example, Camfield et al. (2010) note that dissatisfaction is regarded as a lack of respect for Allah in Bangladesh, while positive feelings may not necessarily be relevant to satisfaction with life in Thailand.
Finally, it has been suggested that people’s reference groups and reference points affect their subjective wellbeing (Easterlin, 1974). Thus, some studies argue that individuals judge subjective wellbeing with reference to a standard or norm derived from past or ongoing experiences (Duesenberry, 1959; Easterlin, 1974). Others highlight spatial importance. For example, rural–urban migrants tend to compare their circumstances with those of their new urban neighbours rather than the standard of living they left behind in the countryside (Fafchamps and Shilpi, 2008; Knight and Gunatilaka, 2011).
The present study seeks to determine whether education per se, or education as an influence on employment and income, necessarily increases subjective wellbeing, and to explore the possible causes of any anomalies to such a dynamic.
2.4. The Access of the Poor to Education