Distributional Effects of Freedom and Income on Life Satisfaction: Evidence from East Asian Chinese Societies

• Published date: 01 March 2023
• Author: Hock‐Eam Lim,Daigee Shaw,Le‐Yu Chen,Pei‐Shan Liao
• Date: 01 March 2023
• DOI: http://doi.org/10.1111/asej.12291

ORIGINAL ARTICLE

Distributional Effects of Freedom and Income on Life

Satisfaction: Evidence from East Asian Chinese Societies

Hock-Eam Lim

1

| Daigee Shaw

2

| Le-Yu Chen

2

|

Pei-Shan Liao

3

1

School of Economics, Finance and Banking, Universiti Utara Malaysia, Sintok, Malaysia

2

Institute of Economics, Academia Sinica, Taipei, Taiwan

3

Research Center for Humanities and Social Sciences, Academia Sinica, Taipei, Taiwan

Correspondence

Hock-Eam Lim, School of Economics, Finance and Banking, Universiti Utara Malaysia, Sintok, Kedah, 06010,

Malaysia.

Email: lheam@uum.edu.my

Funding information

Academia Sinica, Grant/Award Number: AS-CDA-106-H01

Abstract

We estimate the distributional effects of freedom and income on life satisfaction (LS) for

East Asian Chinese societies through an ordinal parametric quantile regression approach.

The results show that freedom and income exhibit positive and mostly significant effects

across societies and LS levels. The freedom effects generally become larger for those at

higher LS quantiles. However, the income effects decline as the LS quantile level

increases. Thus, one may have a trade-off between freedom and income without

compromising individual LS. The trade-off of freedom (income) for income (freedom) is

more pronounced for people at a lower (higher) LS level.

KEYWORDS

Chinese societies, distributional effect, freedom, income, life satisfaction, societal values

JEL CLASSIFICATION

A12, A13

1|INTRODUCTION

Literally, freedom refers to one’s ability to choose, act, speak, and think without undue

or unjust constraints (Cambridge Dictionary, 2021; Chanley & Chanley, 2015).

DOI: 10.1111/asej.12291

© 2023 East Asian Economic Association and John Wiley & Sons Australia, Ltd.

Received: 5 August 2021; Accepted: 11 March 2023

Asian Econ. J. 2023;37:113–143. wileyonlinelibrary.com/journal/asej 113

Freedom in a society, as measured by Inglehart et al. (2008),isbasedonthe

locus of control from a socio-psychological perspective (i.e., the extent of

people feeling that they have the freedom of choice and control over the

events that influence their life). This locus of control type of freedom is

closely related to economic and business freedom. For instance, as illustrated

by Pitlik et al. (2015), the increasing economic and business freedom miti-

gates economic scarcity. Consequently, it increases the society members’

locus of control. The present study employs this definition of freedom.

The level of freedom that a society can provide its members influences their

life satisfaction (LS). According to Nobel Laureate Sen (1999), freedom is the

end goal of a country’s development; income-related factors such as GDP

growth and industrialization are mere means to freedom. The role of freedom to

LS might vary across different levels of LS as more freedom is needed to achieve

a high degree of LS. This tallies with Inglehart and Welzel’s(

2005) idea of “ris-

ing freedom,”along with the modernization transition of a society from an agri-

cultural to a knowledge economy. In this context, Chinese societies in East Asia

would be good examples for examining the relationship between freedom and

LS because,

1

over the past few decades, these Chinese societies have been

experiencing several transformations in terms of their cultural variations and

development of their economies and freedom.

Regarding cultural variations, in Singapore, the English-educated Chinese

dominate the society and Western cultural assimilation prevails (Heidhues, 1992).

In China, Hong Kong, and Taiwan, the Chinese share a similar language and cul-

tural heritage. Nevertheless, due to political, economic, and social changes, there

have arisen variations in their subcultural values (see Liao et al., 2005;Yao&

Wu, 2009).

2

As for the development of the economies and freedom before the 1970s, bare

(life or death) survival was the overriding concern of East Asian Chinese in the

face of extreme poverty (Ohno, 2008). While the economic conditions have

greatly improved in these societies, their levels of freedom may not have risen

correspondingly. Based on each country’s freedom assessment (Freedom

House, 2021),

3

the scores among these Chinese societies vary substantially from

“not free”(China) to “partly free”(Singapore and Hong Kong), culminating in

“free”(Taiwan).

Authoritarian developmentalism has brought economic prosperity to the

Chinese societies (Prandecki, 2014). Thus, the basic human needs for survival

1

In the present study, Chinese refers to the ethnic group. For example, Chinese in Singapore refers to the ethnic

group of Chinese in Singapore.

2

In Hong Kong, as a former British colony, the influence of Western culture is pronounced. The culture in Taiwan

is traditional Chinese and also influenced by the culture of Japanese and aboriginal peoples. As for China, it has

been transformed by communist ideology since 1949 and the Cultural Revolution of 1966–1976.

3

Freedom House defines freedom from a broader perspective: from individual freedom of expression and of belief,

to the political, associational and organizational rights.

114 LIM ET AL.