The relationship between status and happiness: Evidence from the caste system in rural India

A large number of empirical studies have investigated the link between social status and happiness; however, in observational data, identification challenges remain severe. This study exploits the fact that, in India, people are assigned a caste from birth. Two similar surveys of household heads (each with N=1000) in rural Punjab and Andhra Pradesh show an increasing pattern of economic welfare with caste hierarchy. This illustrates that, in the rural regions under study, one's caste is still an important determinant of opportunities in life. Subsequently, we find that the castes at the top are clearly more satisfied than the lower and middle castes. This result, which is in line with the predictions of all major social comparison theories, is robust across the two case studies. The pattern across low and middle castes, however, is less clear, reflecting the complex theoretical relationship between being of middle rank, on the one hand, and behaviour, aspirations, and well-being, on the other hand. In the Punjab sample, we even find a significant U-shaped pattern, with the middle castes being the least happy. Interestingly, these patterns resemble those found for Olympic medallists (first documented by Medvec et al., 1995).