China's economy is growing rapidly but happiness has not improved (picture)

China's economy is growing rapidly but happiness has not improved (picture) Los Angeles The new generation of Chinese leadership that will be announced at the 18th National Congress in Beijing may need to reconsider him...

Los Angeles

China's new generation of leadership, to be announced at the 18th National Congress in Beijing, may need to reconsider the Faustian bargain their predecessors made more than 20 years ago: rapid economic growth in exchange for social stability.

As the recent riots at a Foxconn factory in northern China demonstrated, even if the economy can maintain a respectable growth rate, economic growth alone cannot produce the kind of life satisfaction that is crucial to ensuring social stability. This experience proves that satisfying jobs and a strong social security system are crucial to people's happiness.

Starting in 1990, as China shifted to a free market economy, real per capita consumption and gross domestic product (GDP) doubled and then doubled again. Most households now have at least one color television. Refrigerators and washing machines, which were rare before 1990, are now very common in cities.

However, my colleagues and I conducted a survey and analyzed the survey data. There is no evidence that the happiness of ordinary Chinese people has improved compared with the past. In fact, their life satisfaction is lower than in 1990. The biggest drop in satisfaction is among those at the bottom third of the wealth pyramid. But even for the top third of the population, gains in satisfaction have been limited.

Our data were collected by five survey institutions, one of which is a Chinese research institution, and the time span is from 1990 to 2011. The survey focused on urban areas, where economic growth is concentrated. Respondents were asked about their overall satisfaction with life, rating their feelings on a scale of 1 to 10, with 10 being very satisfied.

During this period of significant improvement in the economic life of the Chinese people, it is indeed surprising that their happiness has declined. After all, most policymakers would confidently predict that a quadrupling of material living standards should make them feel much happier than they were in the past.

However, after sorting out the survey results, we found that the trend of changes in happiness over time shows a "U" shape. Life satisfaction showed a downward trend from 1990 to around 2005, and recovered somewhat in 2010, reaching a level slightly lower than that in 1990. In this period of unprecedented economic growth, happiness has shown such a "U"-shaped trend. What should be the explanation?

Before the launch of free market reforms, most working-class Chinese urban workers enjoyed the so-called "iron rice bowl," a permanent job with extensive security provided by their employer, including food subsidies, housing, medical care, child protection, pensions, and jobs for their adult children. During this period, although the income of Chinese urban residents was much lower, their life satisfaction was almost as high as that of people in developed countries.

In the 1990s, China's economy transitioned to privatization, quickly breaking the iron rice bowl. Hundreds of thousands of workers were laid off from state-owned enterprises that were inefficient and unprofitable. Losing your job also means losing the security provided by your employer. More and more migrant workers are moving to cities to work, but they do not enjoy benefits. Urban working-class people who are still employed are increasingly worried about whether their jobs are safe and whether their benefits are sustainable. There has been a significant decline in life satisfaction in urban areas.

Although worker layoffs decreased significantly and unemployment levels began to decline in the first few years of the 21st century, Chinese people's concerns about employment and social security continue to persist.

Concerns about job security are reflected in people’s feelings of satisfaction with economic conditions. In 2007, only 27% of Chinese people in the bottom third of income levels said they were satisfied with their economic situation, down from 42% in 1990. Reflecting the fraying social safety net, health reports among the bottom third of the population also declined, with the proportion reporting good or very good health falling to 44%, compared with 54% in 1990.

China's transformation is similar to that of Central and Eastern European countries in several aspects. The life satisfaction data we have in Central and Eastern European countries are similar to those in China. In almost all countries, life satisfaction fell initially and subsequently rose back to slightly below pre-transition levels. Accompanying the U-shaped trend of changes in happiness is the emergence of large-scale unemployment, the collapse of the social security system, and subsequent improvement to a certain extent.

However, the similarity of the data ends there. In Europe, economic growth initially fell sharply but then rebounded, following changes in life satisfaction data. But in China, while economic output and consumption have expanded rapidly, life satisfaction has declined. This difference shows that economic growth alone is not enough. Employment security and social security are also critical to people's happiness.

What can we learn from China’s transformation? Of course, this does not mean that China should return to the socialist system and the extensive and inefficient central planning model. However, China's market transformation has indeed caused ordinary Chinese people to worry about some things, such as whether they can find and maintain a job, obtain affordable and reliable medical services, and support the elderly and children. It is worthy of recognition that the Chinese government has taken some measures in recent years to expand and improve unemployment and retirement benefits, and has also improved the medical security system. Yet the social safety net still needs significant improvement.

It is worth noting that just as the need to build a strong social safety net is under attack in the United States, the world's most capitalist country has inadvertently proved that social security is crucial to people's happiness.

Richard A. Easterlin is a professor of economics at the University of Southern California and the author of "Appiness, Growth and the Life Cycle".

Translation: Lin Mengke, Wang Tonghe