How Does Relative Income and Variations in Short-Run Wellbeing Affect Wellbeing in the Long Run? Empirical Evidence From China’s Korean Minority

Cognitively appraised life satisfaction is relatively stable over time and can be considered as reflecting subjective wellbeing in the long run. Affect is transitory and can be considered as reflecting subjective wellbeing in the short run. Using the Personal Wellbeing Index to measure cognitively appraised life satisfaction and the Positive and Negative Affect Schedule to measure positive and negative affect we examine how income relative to one’s comparator group and variations in short run wellbeing impact upon wellbeing in the long run. We do so for China’s Korean ethnic minority. We find that affective state has an effect on wellbeing in the long run and that a negative shock to affectivity is more persistent than a positive shock. We also find that relative income, rather than absolute income, matters for wellbeing in the long run and that the results are consistent with a status effect.