Using the Chinese Household Income Project (CHIP) survey for 2013, this paper examines the relationship between income and happiness of China’s urban, rural and migrant population. The dataset consists of a random sample of over 39,858 individuals from the Chinese population. Happiness here is measured by a five-point categorical measure of overall happiness (not happy at all, not very happy, so-so, happy, very happy), and an OLS model is used to identify the potential determinants of happiness among these different subsections of the Chinese population. According to the study, urban households report the highest household income and overall well-being, while the rural households report the lowest household income and overall well-being; the household income and overall well-being of migrant households positions them in the middle range. Despite a positive correlation between income and happiness, absolute income plays only a limited role in determining happiness. Demographic characteristics, unemployment, household net financial assets, accession of social welfare and relative income also influence an individual’s happiness. The findings clarify the various reasons for happiness and point to the importance of both economic and social policies in improving the happiness of Chinese people.
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