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Over the 1990-2000 period, happiness in China plummeted despite massive improvement in material living standards. This finding contradicts the notion that income growth at low living standards leads to gains, not losses, in happiness. We explain this puzzle by drawing on a specific version of relative deprivation theory, the concept of "frustrated achievers." Our major finding is that income inequality in China became increasingly skewed towards the upper income strata, so that related to the average income the financial position of most Chinese worsened. Consequently, financial dissatisfaction rose and became an increasingly important factor in depressing happiness. Other negative feelings emerging with rapid transitions, such as anomie and disaffection, show a less depressive effect on Chinese happiness. We conclude with some speculations about the generalization of our findings for transition economies. [ABSTRACT FROM AUTHOR]

High economic growth brings about no increase in subjective well-being (SWB) in East Germany and even a great decline in China. This paper tries to explain how economic transition impacts on happiness, by using an empirical data from World values surveys. High income group does not enjoy an increasing SWB but low income group suffers a great decline in SWB. The negative effect of unemployment is significant in East Germany and keeps insignificant in China. The effect of political capital keeps significant in China and turns insignificant in East Germany, while education has a positive association with SWB in East Germany but no important effect in China. These findings suggest that economic institutional settings determine the roles of income, unemployment, education and political privilege. [ABSTRACT FROM AUTHOR]