Binomial Logistics Research

Ekonika : Jurnal Ekonomi Universitas Kadiri ISSN (Online) 2581-2157
Volume 5 Nomor 2 Tahun 2020 ISSN (Print) 2502-9304
Tersedia online di
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http://dx.doi.org/10.30737/ekonika.v5i2.713
The Determinants Of Happiness: Empirical Evidence Of Java Island

Dewi Nandini1, Bambang Eko Afiatno2
Airlangga Universitu, Surabaya, Indonesia
email: 1dewinandini@gmail.com, 2 afiatno@yahoo.com
ABSTRAK
Artikel History: Penelitian tentang kebahagiaan di bidang ekonomi semakin
Artikel masuk berkembang sejak kemunculan Easterlin Paradox. Studi ini
Artikel revisi bertujuan untuk menganalisis determinan kebahagiaan di Pulau
Artikel diterima Jawa, Indonesia. Data bersumber dari Survei Pengukuran Tingkat
Kebahagiaan (SPTK) 2017 yang dilaksanakan oleh BPS dengan
mengambil observasi sebesar 23.456 responden. Sebanyak 13
variabel bebas diuji pengaruhnya terhadap kebahagiaan dengan
Keywords: menggunakan analisis regresi logistik biner. Hasil penelitian
Maksimum 5 kata kunci menunjukkan bahwa pendapatan, pendidikan, kesehatan,
hubungan sosial dengan keluarga dan masyarakat, kondisi
lingkungan, serta kehidupan yang bermakna berpengaruh terhadap
kebahagiaan. Secara umum temuan ini memperkuat beberapa
Style APA dalam mensitasi
temuan dari penelitian-penelitian sebelumnya.
artikel ini: [Heading sitasi]
Satu, N. P., & Dua, N. P. Kata Kunci: kebahagiaan, subjective well-being, regresi logistik
(Tahun). Judul Artikel. Ekonika : biner
Jurnal Ekonomi Universitas
Kadiri, v(n), Halaman awal -
Halaman akhir. [heading Isi
sitasi]
ABSTRACT
Happiness research on economics has increasingly developed
since Easterlin Paradox appeared. This research tries to analyze
the determinants of happiness in Java Island, Indonesia. We use
data from the Happiness Measurement Survey 2017 conducted by
the BPS-Statistic Agency of Indonesia. Taking 23,456
observations, we employ binary logistic regression to test the
effects of 13 independent variables on happiness. The results
showed that income, education, health, social relations with family
and society, environmental conditions, and a meaningful life
affected happiness. In general, these findings strengthen some
previous studies findings.
Keyword: happiness, subjective well-being, binary logistic
regression
BACKGROUND
Development progress has been more likely related to economic measurements and
indicators such as poverty and economic growth for a long time. Gross National Product (GNP)
is considered a very representative aggregate measure in reflecting the country's welfare (Frey
The Determinants Of Happiness: Empirical Evidence Of Java Island

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ISSN (Online) 2581-2157
Dewi Nandini, Bambang Eko Afiatno/ Ekonika vol 5 (2) 2020 ISSN (Print) 2502-9304
& Stutzer, 2018; Sohn, 2010). The relationship between per capita income and well-being has
long been familiar in economics. Communities with higher income levels will have easier
access to better living facilities. However, in the last few decades, an idea arose that economic
growth and income were not sufficient indicators to describe development progress in a country
(Clark, 2018).
Diener and Seligman (2004) denoted that even though the economy grew well in the
last few decades, this growth was not followed by increasing life satisfaction in the same period.
This phenomenon has been examined by Easterlin (1974) on his research in America, which
found that increasing income is not followed by increasing happiness. This finding became
known as Easterlin Paradox. We can also link this phenomenon to the suicide rate. World Bank
data shows that suicide rates in high-income countries are higher than in middle-lower-income
countries (see Figure 1).
Figure 1. Comparison of World Suicide Rate
14,32
14,22
10,86
10,75
10,74
High Income Lower Middle Income World 10,64
2015 2016
Source: World Bank, processed (http://data.worldbank.org)
Eventually, some experts and government officials not only began to realize the
importance of measuring welfare that was not only based on income but also encouraged the
thoughts about measuring welfare in more representative ways (Forgeard, Jayawickreme, Kern,
& Seligman, 2011). We can not only assess human welfare materially, but also have to pay
attention to the quality of relationships with others, the pleasant feeling because of sharing with
others, the comfortable natural environment, and good governance (Johns & Ormerod, 2007).
It has increasingly recognized that it is crucial to find welfare measures that not only based on
economic measures but also led to "subjective well-being" conditions (Forgeard et al., 2011;
Frey dan Stutzer, 2018; Graham, 2011).
The study of happiness has increasingly developed and carried out by various experts,
including economists. Economists focused on researches and debates on how happiness could
be a proxy for the utility, which was the central concept of well-being (Graham, 2011). These
did not mean ignoring macro indicators that have long been used as development achievements.
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The happiness measured was expected to complement other macro indicators in measuring
development achievements that could be comparable across countries (Forgeard et al., 2011;
Frey & Stutzer, 2018; Graham, 2011).
Debates on happiness research also occurred in how happiness should be measured.
Most researchers agreed that happiness was slightly complicated and led to various definitions
(Gasper, 2010). Different studies defined happiness in different ways, so that it raised unclear,
overly broad definitions and a variety of terms such as well-being, happiness, quality of life,
and life satisfaction. Diener and Seligman (2004) argued that a more systematic approach is
needed to measure happiness. Some researchers sometimes disregarded this term diversity and
assumed these terms could use interchangeably.
The Organization of Economic Cooperation and Development (OECD) has developed
a framework for better welfare measurement in the publication "How's Life? Measuring Well-
Being". The measurement involves various indicators of different types of capital, namely
economic capital, natural capital, human capital, and social capital (OECD, 2011). Adapting
the OECD framework, the BPS-Statistic Agency of Indonesia contributed to happiness data
provision in Indonesia through Happiness Measurement Survey (Survei Pengukuran Tingkat
Kebahagiaan/SPTK) in 2014 and 2017. This survey describes the level of subjective happiness
related to life aspects that are considered to be relevant and meaningful. These aspects covered
three major dimensions, namely (1) evaluation of the ten domains of human life that are
considered to be essential/important by the majority of the population, (2) affect (feelings or
emotional conditions), and (3) eudaimonia (meaning of life) (meaning of life) (BPS, 2017).
We consider that subjective well-being in Indonesia is very interesting for further
discussion. Several studies of happiness determinants in Indonesia have been carried out
previously using data from the 2007 Indonesian Family Life Survey (IFLS). However, to the
best of our knowledge, there has been no happiness research that uses the 2017 SPTK data from
BPS, which focuses on Java. The 2017 SPTK samples are spread throughout provinces in
Indonesia so that the data will be more representative in describing happiness in Indonesia. In
this study, researchers will analyze the determinants of subjective well-being (henceforth, we
will use the term "happiness"), which focus on provinces in Java Island.
Java is the most populous island in Indonesia which occupied by 56.62 percent of
Indonesia's population. In 2018, this 129.438 km2 island must accommodate 146.68 million
people, so that it has a population density of 1,156.04 people/km2 (BPS, 2019). Not only as of
the center of government, but Java is also the center of most economic activities in Indonesia,
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which contributed to 58.48 percent of Indonesia's Gross Domestic Product (GDP) in 2018
(BPS, 2019).
LITERATURE REVIEW
Happiness on Economic View

In economic literature, happiness has a close relation to consumer satisfaction, which is
known as a utility. The utility concept is defined as a measure (numerical score) of the relative
satisfaction level obtained by consumers from the consumption of goods and services (Pyndick
& Rubinfeld, 2013; Sexton, Fortura, & Kovacs, 2016). In everyday life, we uasually call a
utility as a benefit or well-being (Pyndick & Rubinfeld, 2013). Nicholson and Snyder (2012)
state that utility refers to overall satisfaction, which is influenced by various factors so that the
measurement is always assumed to be ceteris paribus (other things being equal). Besides, the
utility is also closely related to consumer preferences, so the measurement must meet the
characteristics of consumer preferences, namely completeness, transitivity, and continuity
(Nicholson & Snyder, 2012).
Subjectivity in utility concept allows someone to express his opinion about the
happiness or satisfaction of life they experience (Frey & Stutzer, 2002). Happiness
measurement can be considered into categorical data (ordinal) and analyzed with econometrics.
Higher grades are assumed to represent a higher level of happiness. The econometric function
of happiness can be written as follows:
𝑌𝑖𝑡 = 𝛼 + 𝛽𝑋𝑖𝑡 + 𝜀𝑖𝑡 ............................................................ (1)
Where Yit is the level happiness of individual i at time t, whereas Xit is the socioeconomic
variables of individual i at time t.
Meanwhile, the concept of happiness is known as a concept with an expansive and
complex definition. Besides, the definition of happiness is very subjective that only an
individual felt himself. This subjectivity makes measuring happiness more difficult. According
to Veenhoven (1988), there are three theories of happiness as follows:
1. Set-point theory, happiness is considered as something that has been determined (influenced
by genetics and culture) and does not depend on a person's ways of life.
2. Cognitive theory, happiness is considered as a person's thoughts and reactions to the
difference between reality and hope in his life.
3. Affective theory, happiness is considered as a reflection of the person's good and bad life in
general.
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In addition to these theories, Huang in Rahayu (2016) describes the theory of happiness
into three traditional theories and one modern theory. The hedonism theory said that happiness
is maximizing pleasure and minimizing pain. The desire theory explained happiness as the
realization of one's desires. Objective list theory stated that happiness is if we could reach the
target and life goals. Moreover, the authentic theory said that happiness includes pleasant
life/pleasure, good life, and meaningful life). On economic studies, there are more various terms
to describe happiness, including subjective well-being and life satisfaction. In their application,
the terms replace each other, but Graham (2011) said there are fundamental meanings to these
three terms:
1. Happiness generally represents how happy someone is; respondents are not limited to a
particular definition and can define happiness according to their standards.
2. Life satisfaction has a smaller scope and closer to income, but the response to this question
is generally similar to happiness.
3. Subjective well-being includes all the ways a person states his welfare, which covers
satisfaction to different aspects of life, such as work, health, education, and others.
According to Frey and Stutzer (2018), we could use several methods to measure
happiness, namely surveys, brain activity, day reconstruction method, and U-index. Among
these methods, the survey method is the most widely used. Some examples of happiness surveys
are the General Social Survey, the World Value Survey, and The Eurobarometer Survey. At the
same time, other methods are rarely used because it requires a longer time and higher cost.
Earlier Studies
An interest in the study of happiness in economics began with the emergence of Richard
Easterlin’s research in America in 1974 (Frey & Stutzer, 2002). As happiness studies develop
rapidly in various science, especially in the economy, governments all over the world are
increasingly aware of and begin using happiness data in public policy decisions. Increased
happiness can be considered as an appropriate indicator to measure social progress and public
policy goals (Helliwell, Layard, & Sachs, 2015). The happiness studies in economics mostly
analyze to find determinants of happiness by using the ordered probit technique as an analysis
tool.
Several researchers conducted studies on the determinants of happiness in Indonesia,
namely Landiyanto et al. (2011), Sohn (2010), Rahayu (2016), and Aryogi and Wulansari
(2016). Those four studies used the 2007 IFLS data. Those four studies used the 2007 IFLS
data. The variables used in those studies were almost the same, but there were differences in
the variables defining and observation numbers. In general, the results of the study are relatively
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similar, that a person will be happier if he has better health conditions, better educated, lives in
an urban area, married, and has a higher income. Higher assets, better social relationships, and
a sound government system also make someone happier. Meanwhile, age has U-shaped
influences on happiness.
Research on the determinants of happiness in several countries has more varied units of
observation. Research by Chyi and Mao (2012) examined the determinants of happiness, which
focused on 1,533 Chinese residents aged 60 years and over. The study analyzed data from the
2005 Chinese General Social Survey using ordered probit techniques with instrumental
variables. The elderly in China feel happier if they have high incomes, large houses, live in
villages, and live with grandchildren.
Another study by Senasu and Singhapakdi (2017) using telephone interview data based
on a questionnaire developed by the Japan International Cooperation Agency, analyzed the
happiness’ determinants of 1,004 respondents in Thailand. The results show that younger, better
educated, and high-income people tend to be happier. Also, health status influences happiness
in more religious people.
Similar studies were also carried out by Knight et al. (2009) and Appleton and Song
(2008). Both studies analyzed the determinants of happiness in mainland China, but the focus
and data sets used by those two studies were different. Knight et al. focus on rural Chinese
populations while Appleton and Song focus on urban populations. Some of the same things
from both studies are in both urban and rural areas one is happier if he has a higher income, is
married, and has good social relations with his family and society.
Other research by Eren and Asici (2017) includes a variable comparison of current life
with the previous five years of life, a view of money (materialism attitude), and expectations
of a future life as a proxy for psychological well-being. The results of this research indicate that
materialistic attitudes lead to unhappiness. Conversely, someone tends to be happier if they
have better hopes and expectations in the future.
METHODS
Data Source
This research is a quantitative-based study by utilizing microdata from the 2017
Happiness Measurement Survey (SPTK). We use binary logistic regression to estimate the
determinants of happiness. SPTK 2017 is one of the surveys conducted by BPS-Statistic
Agency of Indonesia to calculate a happiness index. This survey only interviews the head of
the household or his partner because he was considered to have better knowledge about the
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condition of his household. Respondents were interviewed by trained officers using a
questionnaire.
In total, SPTK 2017 consists of 75,000 household samples and spread evenly on all
provinces of Indonesia. Samples were randomly selected using the two-stage-one-phase-
sampling method. This survey successfully recorded 72,317 households. The observations in
this study will focus on the provinces in Java. From the overall responses sample, there were
23,456 observations in six provinces in Java.
Variables and Research Model

The independent variables in this study are "generally how happy the sample is." In the
SPTK 2017 questionnaire, this question asks respondents to rate their overall happiness in life,
by giving a score of 0-10. A value of 0 indicates the worst condition, and 10 indicates the best
condition. Nevertheless, to simplify the analysis, in this study, the data were reclassified into
binary form (happy for a score of 6-10 and not happy for a score of 0-5). Meanwhile, we will
analyze 13 independent variables for their effects on happiness. They are 1) age, 2) quadratic
age, 3) marital status, 4) health status, 5) presence/absence of chronic disease, 6) education, 7)
classification residence, 8) homeownership, 9) monthly household income, 10) family
harmony, 11) social relationships, 12) environmental conditions, and 13) meaning of life
(eudaimonia).
Age and age squares are ratio scaled. Age is the age of respondents based on their last
birthday. Quadratic elements are included to see whether the age variable has an effect on U-
shaped, like the majority of previous studies. Marital status is divided into two, married and
single—the single consists of respondents who are single and divorced. The respondent's health
condition was approached with two variables, health status and the presence of chronic disease.
Health status represents the intensity of respondents experiencing physical disorders due to
symptoms of the disease, which is categorized as healthy and unhealthy. Meanwhile, chronic
diseases are diseases that require a relatively long time to appear or cure. This variable is
categorized as present and absent.
Education represents the highest level of education completed by respondents. This
variable is categorized as less than junior high school and senior high school above.
Classification of residence is a classification of the area of residence of the respondent, in rural
or urban areas. Homeownership is ownership of residential buildings occupied by respondents
and their households, which are categorized as their own and not their own. Monthly household
income is the average income earned by all household members, which is categorized
under/equal to Rp 1,800,000 and above Rp 1,800,000.
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Meanwhile, family relationships represent respondents' satisfaction with the harmony
of their families. In this variable, family harmony includes three things, cohesiveness, trust in
the family, and sufficient time for joint activities. Social relationships are respondents'
satisfaction with relationships with the surrounding community. This social relationship is
related to harmony and the opportunity to socialize with residents around the respondent's
residence. Environmental conditions indicate respondents' satisfaction with the environmental
conditions of their homes, which include water quality, air quality, and disaster events. The
meaning of life (eudaimonia) is the respondent's assessment of the meaning of life. It includes
independence, environmental mastery, self-development, positive relationships with others, life
goals, and self-acceptance. Like the independent variables, on these four variables, the
respondent was asked to give a score of 0-10, which illustrates his perception. However, in this
research these four variables will be categorized binary (code 0 for score 0-5, and code 1 for
score 6-10). Overall the variables used in this study are presented in the following Table 1.
Table 1. Variable’s Definitions

No. Variable Name Definition Symbol Categorization
(1) (2) (3) (4) (5)
Dependent Variables
1. Happiness Respondent’s assessment happy 0 = unhappy
of general happiness in life 1 = happy
Independent Variables
1. Age Respondent’s age age, age2 -
according to their last
birthday
2. Marital status Respondent’s marital status married 0 = no
1 = yes
3. Education Respondent’s highest education 0 = ≤ junior high school

completed education level 1 = ≥ senior high school
4. Residence Respondent’s residence urban 0 = no
classification classification, urban or 1 = yes
rural
5. Health status Intensity of health sick 0 = often/highly often
problems for the past six 1 = never/rarely
months
6. Chronic disease The presence of chronic chronic 0 = yes
disease 1 = no
7. Household Total income (money and income 0 = ≤ 1,8 million rupiahs
income goods) obtained by all 1 = > 1,8 million rupiahs
household members
8. Homeownership Ownership of residential home 0 = not their own

buildings occupied by 1 = their own
respondents and their
households
9. Family harmony Respondent’s satisfaction family 0 = not satisfied
of family harmony 1 = satisfied
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No. Variable Name Definition Symbol Categorization
(1) (2) (3) (4) (5)
10. Social Respondent’s satisfaction social 0 = not satisfied
relationship of social relations with 1 = satisfied
their neighborhood
residents
11. Environmental Respondent’s assessment environment 0 = not satisfied
conditions of the environment around 1 = satisfied
their residence
12. Meaning of life Respondent’s assessment eudaimonia 0 = meaningless
of their meaning of life 1 = meaningful
This study employs binary logistic analysis to determine the effect of independent
variables on dependent variables. This analysis allows modeling in cases the dependent variable
has two categories. By applying binary logistic regression, we can obtain the probability of an
event affected by independent variables. We use Stata 13.0 software to process the data. The
model can be written as follows:
𝑃
𝑙𝑛 (1−𝑃) = 𝛽0 + 𝛽1 𝑎𝑔𝑒 + 𝛽2 𝑎𝑔𝑒 2 + 𝛽3 𝑒𝑑𝑢𝑐𝑎𝑡𝑖𝑜𝑛 + 𝛽4 𝑚𝑎𝑟𝑟𝑖𝑒𝑑 + 𝛽5 𝑢𝑟𝑏𝑎𝑛 + 𝛽6 𝑠𝑖𝑐𝑘 +
𝛽7 𝑐ℎ𝑟𝑜𝑛𝑖𝑐 + 𝛽8 𝑖𝑛𝑐𝑜𝑚𝑒 + 𝛽9 ℎ𝑜𝑚𝑒 + 𝛽10 𝑓𝑎𝑚𝑖𝑙𝑦 + 𝛽11 𝑠𝑜𝑐𝑖𝑎𝑙 +
𝛽12 𝑒𝑛𝑣𝑖𝑟𝑜𝑛𝑚𝑒𝑛𝑡 + 𝛽13 𝑒𝑢𝑑𝑎𝑖𝑚𝑜𝑛𝑖𝑎 + 𝜀 ............................................. (2)
In binary logistics analysis, there are several tests to assess whether the model is
meaningful or not, simultaneously and partially. The simultaneous test is used to determine
whether all independent variables together affect the dependent variable, using the G2 statistical
test (likelihood ratio test) as follows:
𝐿
𝐺 = −2𝑙𝑛 𝐿0 ............................................................. (3)
1
Where:
𝐿𝑜 = likelihood without independent variables
𝐿1 = likelihood with all independent variables
Meanwhile, the partial test is used to determine whether each independent variable
affects the dependent variable, using Wald statistical test as follows:
2
𝛽
𝑊𝑗 = (𝑠𝑒(𝛽𝑗 )) .......................................................... (4)
𝑗
Where j = 1, 2, 3, …, k (k = number of independent variables).
RESULTS
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The happiness index is an index compiled by BPS to describe happiness in Indonesia
based on SPTK data. The index is expressed on a scale of 0-100. So far, BPS has released the
happiness index twice in 2014 and 2017. The methods used in preparing the 2017 happiness
index are different from those used in the 2014 happiness index. In 2014, the happiness index
was only based on life satisfaction dimensions. Meanwhile, the 2017 happiness index is formed
from three dimensions, 1) the life satisfaction dimension, 2) the affect dimension
(feeling/emotional), and 3) the meaning of life dimension (eudaimonia).
In 2017, Indonesia's happiness index was 70.69 and was declared as quite happy (BPS,
2017). Most provinces (24 provinces) have a happiness index above the national index. The
province with the highest happiness index is North Maluku, while the province with the lowest
happiness index is Papua. Comparison of happiness index for the provinces in Java can be seen
in the following Figure 2. DI Yogyakarta is a province in Java which has the highest happiness
index.
Figure 2. 2017 Happiness Index Comparison
72,93
71,33
70,92 70,77
69,58 69,83
DKI Jakarta West Java Central Java DI Yogyakarta East Java Banten
Source : BPS (2017), processed
Figure 3 below shows the dimensions of the happiness index in six provinces located in
Java Island. Among the three dimensions, the index of affect dimension has the smallest index
value compared to the other dimensions. A similar pattern is found in five provinces except for
DI Yogyakarta. Sequentially the highest index value in the DI Yogyakarta Province is the
meaning of life dimension, affect dimension, and life satisfaction dimension. Whereas in
general, the pattern in the other five provinces shows that affect dimension has the lowest index
value.
Figure 3. Comparison of The Dimensions of 2017 Happiness Index
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DKI Jakarta
74,04
71,60
Banten West Java
71,13
68,06 71,43
70,37 70,22
67,8 66,83
68,79
70,45 70,92
71,68
71,66 71,36
East Java Central Java
71,98
73,49 73,38
DI Yogyakarta
Index of Life Satisfaction Dimension Index of Affect Dimension
Index of Meaning of Life
Source : BPS (2017), processed
Table 3 below shows the results of logistic regression estimation. As explained earlier,
simultaneous and partial tests are needed to see whether the model formed is good or not. The
simultaneous test shows a significant probability value (p-value) (<0.01), which means that the
independent variable influences the dependent variable. The Pseudo-R2 value indicates the
effects of the simultaneous influence of the independent variables on the dependent variable.
The test shows the value of 0.2126, which means that all independent variables give an effect
of 21.26 percent to the dependent variable, while other variables influence the remaining 78.74
percent. The partial test also shows significant results (p-value <0.01), which indicates that each
independent variable included in the model affects the dependent variable.
In Table 3, column 4 shows the odds ratio, which shows the probability of the
characteristics of the independent variable for happiness. Marital status shows significant
results in the model. This result is in line with several previous studies (Frijters, Haisken-
DeNew, & Shields, 2004; Kalyuzhnova & Kambhampati, 2008; Knight et al., 2009; Sohn,
2010). The odds of a married respondent being happy compared to a single respondent is
1,2638, which means marrying people more likely to be happy. According to Frey and Stutzer
(2018) marriage can be a counterweight and reduce stress feelings because of work and
loneliness. Economically, marriage also provides financial guarantees in the adverse economic
conditions, and also provide higher capital accumulation (Stutzer & Frey, 2006).
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Table 3. Binary Logistic Regression Results
Independent Varaibles Symbol β Odds Ratio
(1) (2) (3) (4)
Intercept Β0 -1.4300* 0.2393
Age age -0.0910* 0.9129
Age Square age2 0.0009* 1.0009
Marital status married 0.2341* 1.2638
Education education 0.6101* 1.8406
Residence classification urban 0.1968* 1.2174
Health status sick 0.4184* 1.5194
Chronic disease chronic 0.2769* 1.3191
Household income income 0.6740* 1.9621
Homeownership home 0.3149* 1.3701
Family harmony family 1.4770* 4.3799
Social relationship social 0.7344* 2.0842
Environmental condition environment 0.7682* 2.1559
Meaning of life eudaimonia 1.9846* 7.2758
* (significant on α = 0.01)
Pseudo R2 = 0.2126
Number of observations = 23,456
Source: 2017 SPTK raw data, processed
The level of education also shows significant results, supporting the research by Chyi
and Mao (2012), Landiyanto, et al. (2011), also Senasu and Singhapakdi (2017). The odds of
respondent graduated from high school and above being happy compared to those who
graduated from junior high school or below is 1.8406, which means higher education people
are more likely to be happy. By reaching higher education, people will have better opportunities
and broader networks in employment (Chen, 2012; Frey & Stutzer, 2018). The odds of the
urban respondent being happy compared to the rural respondent is 1.2174, which means that
urban people are more likely to be happy. This result is contrary to Hudson (2006), Gerdtham
(2001), and Graham and Felton (2006) who find that someone who lives in a big city reports
lower happiness. However, according to Sohn (2010), Indonesian urban people are happier
because they tend to be more educated than rural people.
Health has a positive effect on happiness. People with better health conditions tend to
be happier than those who do not (Oswald & Powdthavee, 2008; Shields & Price, 2005). The
odds of respondents who have never/rarely been sick in being happy compared to those who
frequently/highly often get sick is 1.5194, which means healthy people are more likely to be
happy. In addition, respondents who did not have chronic disease had a 1.3191 higher
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probability of being happy than respondents who had a chronic disease. The results support the
findings of Fijters et.al (2004), Sohn (2010), and Landiyanto et.al (2011).
Happiness research on economic mostly includes income variables. The estimation
results show that respondents with higher household income are 1,9621 times more likely to be
happier than respondents with lower income. This result is in line with many studies, including
Appleton and Song (2008), Chyi and Mao (2012), also Eren and Asici (2017). However, at a
certain point, the increase in happiness will be smaller as income increases (Johns & Ormerod,
2007). Also, materialistic leads to unhappiness (Eren & Aşıcı, 2017; Frey & Stutzer, 2018).
Besides, respondents who own their own homes have a probability of 1.3701 times happier than
respondents who do not have their own homes. This finding is in line with the findings of Chyi
and Mao (2012) which show that homeownership has a positive effect on happiness.
The odds of respondents who were satisfied with the harmony of their families
compared to those who were dissatisfied are 4.3799, which means people are more likely to be
happy if they have good relationships among families. Likewise, respondents who are satisfied
with their social relations have a probability of 2.0842 times happier than dissatisfied
respondents. These show that good social relations with family and society are essential aspects
that influence happiness (Frey & Stutzer, 2018; Knight et al., 2009; Sohn, 2010). An excellent
social relationship is also a source of social capital formation. BPS (2010, 2016) said that social
capital is a form of horizontal human relations that can affect community productivity. In
several studies, social capital has a positive impact on happiness (Bartolini & Bilancini, 2010;
Sarracino, 2012; Tokuda, Fujii, & Inoguchi, 2010).
Veenhoven (2000) states that environmental feasibility reflects environmental quality
where people can get what they need. Not only nature, but the feasibility of the environment
also includes social life in it. Respondents who are satisfied with their environment condition
have a probability of 2.1559 times happier than dissatisfied respondents. Also, the odds of
respondents who feel meaningful life compared to those who have a meaningless life is 7.2758,
means that people are more likely to be happy if their life feels meaningful. Eren and Asici
(2017) include proxy variables for psychological well-being in their research and found that
hopes and expectations for a better future will make people happier.
CONCLUSION AND SUGGESTION
This study tries to examine the determinants of happiness in Indonesia, which focused
on the provinces in Java Island. The results found that the factors that can increase the
probability of happiness are higher education, higher income, living in urban areas, better
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health, owning a home, living conditions, harmonious family, good social relationships, and
psychologically feel meaningful life. Meanwhile, age affects happiness in the U-shaped. These
findings also strengthen the previous findings.
Attention to happiness becomes essential for policymakers because happiness is
expected to be a measure that can complement other macroeconomic indicators to reflect the
country's achievement. Health and education are still essential aspects that the community and
government must pay attention to them. The central and regional governments can guarantee
the availability of qualified and affordable health and education facilities so that they can
develop the quality of human resources in Java. However, the community must also be
responsible for maintaining health with a healthy lifestyle and nutritious food.
As the most populous island in Indonesia, it is undeniable that Java has a severe problem
in the environment feasibility, especially in the capital city at each province. An overcrowded
environment always leads to an abundance of garbage, which can lead to floods. Not only that,
increasing forest destruction potency for housing and agricultural purposes can endanger forest
sustainability and cause natural disasters. Moreover, it also requires joint efforts to maintain
family harmony and good social relations relationship. Good social relationships will foster
social capital in the community and create a more productive community in supporting
development.
One limitation of this research lies in the data used. 2017 SPTK data does not reflect the
happiness of each individual. This problem makes 2017 SPTK less representative for a more
specific analysis of happiness. Another limitation of this study is the use of cross-section data,
so there is no way to see the trend of happiness in Indonesia. The analytical tool used also tends
to be simpler than previous studies so that in the future, it is better to employ better estimation
techniques.
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Ekonika : Jurnal Ekonomi Universitas Kadiri ISSN (Online) 2581-2157

Volume 5 Nomor 2 Tahun 2020 ISSN (Print) 2502-9304

The Determinants Of Happiness: Empirical Evidence Of Java Island

The Determinants Of Happiness: Empirical Evidence Of Java Island

High Income Lower Middle Income World 10,64

Source: World Bank, processed (http://data.worldbank.org)

Happiness on Economic View

𝑌𝑖𝑡 = 𝛼 + 𝛽𝑋𝑖𝑡 + 𝜀𝑖𝑡 ............................................................ (1)

Variables and Research Model

Table 1. Variable’s Definitions

3. Education Respondent’s highest education 0 = ≤ junior high school

8. Homeownership Ownership of residential home 0 = not their own

Where j = 1, 2, 3, …, k (k = number of independent variables).

Source : BPS (2017), processed

Figure 3. Comparison of The Dimensions of 2017 Happiness Index

Source : BPS (2017), processed

CONCLUSION AND SUGGESTION

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