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Understanding fixed effects in human well-being

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  • Boyce, Christopher J.
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    Abstract

    In studies of subjective well-being, economists and other researchers typically use a fixed or random effect estimation to control for unobservable heterogeneity across individuals. Such individual heterogeneity, although substantially reducing the estimated effect of many characteristics, is little understood. This paper shows that personality measures can account for 20% of this heterogeneity and a further 13% can be accounted for by other observable between-person information. This paper then demonstrates that the use of personality measures, in a new technique developed by [Plumper, T., Troeger, V.E. (2007). Efficient estimation of time-invariant and rarely changing variables in finite sample panel analyses with unit fixed effects, Political Analysis, 15(2), 124-139.], can help researchers obtain improved estimates for important characteristics such as marital status, disability and income. The paper argues that this has important practical implications.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Economic Psychology.

    Volume (Year): 31 (2010)
    Issue (Month): 1 (February)
    Pages: 1-16

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    Handle: RePEc:eee:joepsy:v:31:y:2010:i:1:p:1-16

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    Web page: http://www.elsevier.com/locate/joep

    Related research

    Keywords: Life satisfaction Individual differences Personality Fixed effect vector decomposition GSOEP;

    References

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    Citations

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    Cited by:
    1. Deborah A. Cobb‐Clark & Stefanie Schurer, 2013. "Two Economists' Musings on the Stability of Locus of Control," Economic Journal, Royal Economic Society, vol. 0, pages F358-F400, 08.
    2. Uysal, Selver Derya & Pohlmeier, Winfried, 2011. "Unemployment duration and personality," Journal of Economic Psychology, Elsevier, vol. 32(6), pages 980-992.
    3. Drydakis, Nick, 2013. "Bullying at School and Labour Market Outcomes," IZA Discussion Papers 7432, Institute for the Study of Labor (IZA).
    4. Santiago Budria, 2013. "Are Relative-Income Effects Constant Across the Well-Being Distribution?," Journal of Happiness Studies, Springer, vol. 14(4), pages 1379-1408, August.
    5. Christine Bertram & Katrin Rehdanz, 2014. "The role of urban green space for human well-being," Kiel Working Papers 1911, Kiel Institute for the World Economy.
    6. Budría, Santiago & Ferrer-i-Carbonell, Ada, 2012. "Income Comparisons and Non-Cognitive Skills," IZA Discussion Papers 6419, Institute for the Study of Labor (IZA).
    7. Akay, Alpaslan & Constant, Amelie F. & Giulietti, Corrado, 2012. "The Impact of Immigration on the Well-Being of Natives," IZA Discussion Papers 6630, Institute for the Study of Labor (IZA).
    8. Christopher Boyce & Alex Wood & Nattavudh Powdthavee, 2013. "Is Personality Fixed? Personality Changes as Much as “Variable” Economic Factors and More Strongly Predicts Changes to Life Satisfaction," Social Indicators Research, Springer, vol. 111(1), pages 287-305, March.
    9. Ada Ferrer-i-Carbonell, 2013. "Happiness economics," SERIEs, Spanish Economic Association, vol. 4(1), pages 35-60, March.
    10. Santi Budria & Ada Ferrer-i-Carbonell, 2012. "Income Comparisons and Non-cognitive Skills," SOEPpapers on Multidisciplinary Panel Data Research 441, DIW Berlin, The German Socio-Economic Panel (SOEP).
    11. Budría, Santiago, 2012. "Are Relative-Income Effects Constant across the Well-being Distribution?," IZA Discussion Papers 6591, Institute for the Study of Labor (IZA).
    12. Mora, Toni, 2013. "The association between adolescent height and student school satisfaction: Recent evidence from Catalonia," Economics & Human Biology, Elsevier, vol. 11(2), pages 197-200.
    13. Krause, Annabelle, 2013. "Don’t worry, be happy? Happiness and reemployment," Journal of Economic Behavior & Organization, Elsevier, vol. 96(C), pages 1-20.
    14. Santi Budria & Ada Ferrer-i-Carbonell, 2013. "Income Comparisons and Non-Cognitive Skills," Working Papers 733, Barcelona Graduate School of Economics.

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