The Effect of Income on Positive and Negative Subjective Well-Being
AbstractIncreasing evidence from the empirical economic and psychological literature suggests that positive and negative well-being are more than opposite ends of the same phenomenon. Two separate measures of the dependent variable may be needed when analyzing the determinants of subjective well-being. We argue that this conclusion reflects in part the use of too restrictive econometric models. A flexible multiple-index ordered probit panel data model with varying thresholds can identify response asymmetries in single-item measures of subjective well-being. An application to data from the German Socio-Economic Panel for 1984-2004 shows that income has only a minor effect on positive subjective well-being but a large effect on negative well-being.
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Bibliographic InfoPaper provided by University of Zurich, Socioeconomic Institute in its series Working Papers with number 0605.
Length: 23 pages
Date of creation: May 2006
Date of revision:
Publication status: published in Social Indicators Research 95, pp. 111–128, 2010
generalized ordered probit model; marginal probability effects; random and fixed effects; life-satisfaction;
Find related papers by JEL classification:
- I31 - Health, Education, and Welfare - - Welfare and Poverty - - - General Welfare
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Longitudinal Data; Spatial Time Series
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-06-03 (All new papers)
- NEP-DCM-2006-06-03 (Discrete Choice Models)
- NEP-SOC-2006-06-03 (Social Norms & Social Capital)
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