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Inside the Life Satisfaction Blackbox

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  • Becchetti, Leonardo

    ()
    (University of Rome Tor Vergata)

  • Corrado, Luisa

    ()
    (University of Rome Tor Vergata)

  • Samà, Paola

    ()
    (University of Rome Tor Vergata)

Abstract

We propose a measure of life satisfaction, alternative to the standard synthetic cognitive wellbeing question, based on the specific contribution of eleven life satisfaction sub-components (including satisfaction about the past, life opportunities, hope for the future, vitality, control over one’s on life, meaning of life). The alternative measure is either estimated as a latent factor, obtained as a simple unweighted average from the above mentioned sub-components, or extracted with principal component analysis. We document that the new dependent variable fits much better standard socio-demographic controls and corrects the Danish life satisfaction bias in the direction suggested by the vignette approach. These findings do not reject our theoretical assumption that the alternative measures derived from the life satisfaction sub-components are less noisy and less culturally biased and therefore perform better than the standard self-reported life satisfaction. The straightforward policy advice of the paper is to introduce the above mentioned sub-components (similarly to what happens with sub-questions used to calculate the General Health Questionnaire score) in an additional question to measure more effectively subjective wellbeing.

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Bibliographic Info

Paper provided by Associazione Italiana per la Cultura della Cooperazione e del Non Profit in its series AICCON Working Papers with number 116-2012.

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Length: 29 pages
Date of creation: 01 Nov 2012
Date of revision:
Handle: RePEc:ris:aiccon:2012_116

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Keywords: life satisfaction; country bias; measurement error; multiple indicators.;

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  1. Leonardo Becchetti & Riccardo Massari & Paolo Naticchioni, 2010. "Why has happiness inequality increased? Suggestions for promoting social cohesion," Working Papers 177, ECINEQ, Society for the Study of Economic Inequality.
  2. Arthur Lewbel, 1997. "Constructing Instruments for Regressions with Measurement Error when no Additional Data are Available, with an Application to Patents and R&D," Econometrica, Econometric Society, vol. 65(5), pages 1201-1214, September.
  3. Dimitrios Christelis, 2011. "Imputation of Missing Data in Waves 1 and 2 of SHARE," CSEF Working Papers 278, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  4. Frijters, Paul & Beatton, Tony, 2012. "The mystery of the U-shaped relationship between happiness and age," Journal of Economic Behavior & Organization, Elsevier, vol. 82(2), pages 525-542.
  5. Dagenais, Marcel G. & Dagenais, Denyse L., 1997. "Higher moment estimators for linear regression models with errors in the variables," Journal of Econometrics, Elsevier, vol. 76(1-2), pages 193-221.
  6. Bernard M.S. van Praag & B.E. Baarsma, 2004. "Using Happiness Surveys to value Intangibles; the Case of Airport Noise," Tinbergen Institute Discussion Papers 04-024/3, Tinbergen Institute.
  7. Ada Ferrer-i-Carbonell & Bernard M.S. Van Praag & Ioannis Theodossiou, 2011. "Vignette Equivalence and Response Consistency; The Case of Job Satisfaction," CESifo Working Paper Series 3662, CESifo Group Munich.
  8. Corrado, L. & Weeks, M., 2010. "Identification Strategies in Survey Response Using Vignettes," Cambridge Working Papers in Economics 1031, Faculty of Economics, University of Cambridge.
  9. Clark, Andrew E. & Oswald, Andrew J. & Warr, Peter B., 1994. "Is job satisfaction u-shaped in age ?," CEPREMAP Working Papers (Couverture Orange) 9407, CEPREMAP.
  10. Bound, John & Brown, Charles & Mathiowetz, Nancy, 2001. "Measurement error in survey data," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 59, pages 3705-3843 Elsevier.
  11. Bruno S Frey & Alois Stutzer, 2000. "What are the sources of happiness?," Economics working papers 2000-27, Department of Economics, Johannes Kepler University Linz, Austria.
  12. Teresa Bago d'Uva & Maarten Lindeboom & Owen O'Donnell & Eddy van Doorslaer, 2009. "Slipping Anchor? Testing the Vignettes Approach to Identification and Correction of Reporting Heterogeneity," Tinbergen Institute Discussion Papers 09-091/3, Tinbergen Institute.
  13. Luechinger, Simon & Raschky, Paul A., 2009. "Valuing flood disasters using the life satisfaction approach," Journal of Public Economics, Elsevier, vol. 93(3-4), pages 620-633, April.
  14. Welsch, Heinz, 2002. "Preferences over Prosperity and Pollution: Environmental Valuation Based on Happiness Surveys," Kyklos, Wiley Blackwell, vol. 55(4), pages 473-94.
  15. Bruno S. Frey & Alois Stutzer, 2000. "Maximising Happiness?," German Economic Review, Verein für Socialpolitik, vol. 1(2), pages 145-167, 05.
  16. Ada Ferrer-i-Carbonell & Paul Frijters, 2002. "How important is Methodology for the Estimates of the Determinants of Happiness?," Tinbergen Institute Discussion Papers 02-024/3, Tinbergen Institute.
  17. Bruno Frey & Alois Stutzer, 2000. "Happiness Prospers in Democracy," Journal of Happiness Studies, Springer, vol. 1(1), pages 79-102, March.
  18. Pakes, Ariel, 1982. "On the Asymptotic Bias of Wald-Type Estimators of a Straight Line When Both Variables Are Subject to Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 23(2), pages 491-97, June.
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