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Heterogeneity in Reported Well-Being: Evidence from Twelve European Countries

  • Andrew Clark
  • Fabrice Etilé
  • Fabien Postel-Vinay
  • Claudia Senik
  • Karine Van der Straeten

This paper models the relationship between income and reported well-being using latent class techniques applied to panel data from twelve European countries. Introducing both intercept and slope heterogeneity into this relationship, we strongly reject the hypothesis that individuals transform income into well-being in the same way. We show that both individual characteristics and country of residence are strong predictors of the four classes we identify. We expect that differences in the marginal effect of income on well-being across classes will be reflected in both behaviour and preferences for redistribution. Copyright 2005 Royal Economic Society.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.0013-0133.2005.00983.x
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Article provided by Royal Economic Society in its journal The Economic Journal.

Volume (Year): 115 (2005)
Issue (Month): 502 (03)
Pages: C118-C132

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Handle: RePEc:ecj:econjl:v:115:y:2005:i:502:p:c118-c132
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  1. Ada Ferrer-i-Carbonell & Paul Frijters, 2004. "How Important is Methodology for the estimates of the determinants of Happiness?," Economic Journal, Royal Economic Society, vol. 114(497), pages 641-659, 07.
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  9. Edward Morey & Kathleen Greer Rossmann, 2003. "Using Stated-Preference Questions to Investigate Variations in Willingness to Pay for Preserving Marble Monuments: Classic Heterogeneity, Random Parameters, and Mixture Models," Journal of Cultural Economics, Springer, vol. 27(3), pages 215-229, November.
  10. Clark, Andrew E & Oswald, Andrew J, 1994. "Unhappiness and Unemployment," Economic Journal, Royal Economic Society, vol. 104(424), pages 648-59, May.
  11. Stutzer, Alois & Frey, Bruno S., 2006. "Does marriage make people happy, or do happy people get married?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 35(2), pages 326-347, April.
  12. Clark, Andrew E., 2001. "What really matters in a job? Hedonic measurement using quit data," Labour Economics, Elsevier, vol. 8(2), pages 223-242, May.
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