Measuring welfare: Latent variable models for happiness and capabilities in the presence of unobservable heterogeneity
The 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.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Krishnakumar, Jaya & Ballon, Paola, 2008. "Estimating Basic Capabilities: A Structural Equation Model Applied to Bolivia," World Development, Elsevier, vol. 36(6), pages 992-1010, June.
- Nehring,K. und C.Puppe, 1999.
"A Theory of Diversity,"
Discussion Paper Serie A
605, University of Bonn, Germany.
- Wulf Gaertner & Yongsheng Xu,, .
"On the Structure of Choice Under Different External References,"
97/19, University of Nottingham, School of Economics.
- Wulf Gaertner & Yongsheng Xu, 1999. "On the structure of choice under different external references," Economic Theory, Springer, vol. 14(3), pages 609-620.
- James Banks, 2006. "Economic capabilities, choices and outcomes at older ages," Fiscal Studies, Institute for Fiscal Studies, vol. 27(3), pages 281-311, August.
- François Bourguignon & Francisco H. G. Ferreira & Marta Menéndez, 2007.
"Inequality Of Opportunity In Brazil,"
Review of Income and Wealth,
International Association for Research in Income and Wealth, vol. 53(4), pages 585-618, December.
- Francois Bourguignon & Francisco H.B. Ferreira & Marta Menéndez, 2005. "Inequality of Opportunity in Brazil," Ibero America Institute for Econ. Research (IAI) Discussion Papers 133, Ibero-America Institute for Economic Research.
- Bourguignon, François & Ferreira, Francisco & Menéndez, Marta, 2007. "Inequality of Opportunity in Brazil," Economics Papers from University Paris Dauphine 123456789/1552, Paris Dauphine University.
- Klasen, Stephan, 2000. "Measuring Poverty and Deprivation in South Africa," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 46(1), pages 33-58, March.
- Jean-Yves Duclos & David E. Sahn & Stephen D. Younger, 2006.
"Robust Multidimensional Poverty Comparisons,"
Royal Economic Society, vol. 116(514), pages 943-968, October.
- Paul Anand & Graham Hunter & Ian Carter & Keith Dowding & Francesco Guala & Martin Van Hees, 2009. "The Development of Capability Indicators," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 10(1), pages 125-152.
- Sen, Amartya K, 1979. "Personal Utilities and Public Judgements: Or What's Wrong with Welfare Economics?," Economic Journal, Royal Economic Society, vol. 89(355), pages 537-58, September.
- Walter Bossert & Conchita D'Ambrosio & Vito Peragine, 2007.
"Deprivation and Social Exclusion,"
London School of Economics and Political Science, vol. 74(296), pages 777-803, November.
- BOSSERT, Walter & D'AMBROSIO, Conchita & PERAGINE, Vito, 2004. "Deprivation and Social Exclusion," Cahiers de recherche 2004-01, Universite de Montreal, Departement de sciences economiques.
- BOSSERT, Walter & D'AMBROSIO, Conchita & PERAGINE, Vito, 2004. "Deprivation and Social Exclusion," Cahiers de recherche 02-2004, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
- Jaya Krishnakumar, 2007.
"Going Beyond Functionings to Capabilities: An Econometric Model to Explain and Estimate Capabilities,"
Journal of Human Development and Capabilities,
Taylor & Francis Journals, vol. 8(1), pages 39-63.
- Jaya Krishnakumar, 2004. "Going Beyond Functionings to Capabilities : an Econometric Model to Explain and Estimate Capabilities," Research Papers by the Institute of Economics and Econometrics, Geneva School of Economics and Management, University of Geneva 2004.12, Institut d'Economie et Econométrie, Université de Genève.
- James J. Heckman, 2007.
"The Economics, Technology and Neuroscience of Human Capability Formation,"
NBER Working Papers
13195, National Bureau of Economic Research, Inc.
- Heckman, James J., 2007. "The Economics, Technology and Neuroscience of Human Capability Formation," IZA Discussion Papers 2875, Institute for the Study of Labor (IZA).
When requesting a correction, please mention this item's handle: RePEc:eee:pubeco:v:95:y:2011:i:3-4:p:205-215. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If references are entirely missing, you can add them using this form.