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This paper adds to the relatively scant developing country perspective in the economic literature on happiness by investigating the relationship between income and happiness in the context of Koronadal, a low-income city in Mindanao, Philippines. Subjective happiness and potential contributory factors to happiness (demographic, economic, and social capital variables) are elicited through a survey and analyzed using descriptive and regression analyses. The study provides empirical evidence for the “happy poor” image of the Filipinos, with its survey data revealing that despite high poverty incidence and generally low-income levels, people in Koronadal are pretty happy with a mean self-reported happiness score of 6.75 on a scale of 0–10. The study also lends some empirical support to the modified Easterlin hypothesis: an increase in income increases happiness marginally, but there exists a threshold level – a monthly income of about PHP 20,000 – beyond which further increase in income ceases to increase happiness. Further, survey data reveal that happier people are younger, female, possessing a mobile phone, living in houses with more bedrooms, with savings and no outstanding loans, and are members of credit cooperatives. In so far as these findings reveal some socially favorable economic and institutional conditions, they serve to provide inputs and directions to government officials and policymakers in terms of social programs formulation and implementation.

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