The Effect of Income, Health, Education, and Social Capital on Happiness in Indonesia

Abstract

The purpose of the study is to analyze the effect of income, health, education, and social capital on happiness in Indonesia. The data was taken from National Survey of Social Economic conducted by National Bureau of Statistics of Indonesia in 2012. Ordered probit model was used as estimation technique due to ordinal dependent variable and normal distribution of error assumption. The findings show happiness is affected by absolute income, physical perceived health status, mental health, medium and high level of education, trust in leader, participation on society's activities, tolerance, and help for and from others. However relative income, gender, household head, junior high school, and trust to neighbors do not have significant effect on happiness. Easterlin paradox does not exist in Indonesia because income has positive impact on happiness. Satisfaction on works, financial, family harmony, and leisure time also have significant effect on happiness. Satisfaction on family harmony is the most important factor than others. From demographic variables, it was known that happiness is not different across gender, household head, and low education people. People who are married, live in urban areas, live outside Java and Bali islands, and have more children are found happier. Happiness-age relationship indicates U-shaped curve. Happiness tends to decrease over time until people reach 51 years old. For all three level of happiness, some predictors do not have significant marginal effect on happiness namely relative income, gender, low education level, and trust to neighbors. Meanwhile the variables of household head and number of infant are not robust.

Trust and well‐being: Evidence from Indonesia

“…In two studies, a small positive association was found between trust and well‐being (Ndayambaje, Pierewan, Nizeyumukiza, Nkundimana, & Ayriza, 2020; Pierewan & Veenhoven, 2018). In contrast, two other studies found the relationship between trust in neighbors and happiness insignificant (Rahayu, 2016; Rahayu & Harmadi, 2016). One more study, addressing the issue of endogeneity, found no relationship between social trust and happiness in Indonesia (Sohn, 2013).…”

“…Trust in neighbors did not associate with happiness. Rahayu and Harmadi (2016) found no association between trust in neighbors and happiness and emphasized that despite the tradition of gotong royong, most Indonesians are not willing to leave their children or their houses to their neighbors when they have to go out. No association is found between trust in strangers and well‐being.…”

Social capital dimensions and individual happiness in Indonesia: The micro-level study

“…Meanwhile, studies on this subject have also been carried out in Indonesia, including Alawiyah and Held (2015) and Rahayu and Harmadi (2016). However, no studies have explored the relationship between social capital and individual happiness.…”

Does Better Physical Function Make People Happier?

“…The increase in individual's income is not always followed by the increase of the subjective well-being (Easterlin, 2002). Nevertheless, empirical researches in developing countries indicate the positive effect of the income on the subjective well-being (Diener et al, 2001;Rahayu et al, 2016).…”

“…Individuals who experience severe disability have lower average levels of the subjective well-being. Rahayu et al (2016) and Sohn (2014) use other measurements of health status such as general health status and body mass index.Those health status have positive relationships with the subjective well-being for the case study in Indonesia. Rahayu et al (2016) stated that healthy people are more productive and earn more income than unhealthy one.…”