Measuring welfare: Latent variable models for happiness and capabilities in the presence of unobservable heterogeneity
AbstractThe paper contributes to the operationalisation of the capabilities approach to welfare economics by developing and analyzing data on the freedoms of adults in Argentina. Specifically, it reports on the development and delivery of a survey instrument for measuring capabilities, calculates for each respondent a Nehring-Puppe type index of capabilities and examines the distribution of index scores. The main analytic part of the paper then goes on to develop a generalized linear latent and mixed model (GLLAMM) for assessing the impact of capabilities on life satisfaction, in which allowance is made for (i) unobserved heterogeneity and (ii) possible endogeneity, by introducing latent individual effects and by instrumenting capability variables using income and other socio-economic variables. Our empirical results show that empathy, self-worth, goal-autonomy, discrimination, safety and stress are statistically significant determinants of life satisfaction, in a decreasing order of importance. The paper concludes by suggesting that, if replicated, the findings have profound implications for the conceptualisation and evaluation of economic progress.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Public Economics.
Volume (Year): 95 (2011)
Issue (Month): 3-4 (April)
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/505578
Capabilities Freedoms GLLAMM Happiness Instrumental variables Multi-dimensionality Unobserved heterogeneity;
Other versions of this item:
- Anand, Paul & Krishnakumar, Jaya & Tran, Ngoc Bich, 2011. "Measuring welfare: Latent variable models for happiness and capabilities in the presence of unobservable heterogeneity," Journal of Public Economics, Elsevier, Elsevier, vol. 95(3), pages 205-215.
- C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
- I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
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