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Have Econometric Analyses of Happiness Data Been Futile? A Simple Truth About Happiness Scales

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  • Le-Yu Chen
  • Ekaterina Oparina
  • Nattavudh Powdthavee
  • Sorawoot Srisuma

Abstract

Econometric analyses in the happiness literature typically use subjective well-being (SWB) data to compare the mean of observed or latent happiness across samples. Recent critiques show that comparing the mean of ordinal data is only valid under strong assumptions that are usually rejected by SWB data. This leads to an open question whether much of the empirical studies in the economics of happiness literature have been futile. In order to salvage some of the prior results and avoid future issues, we suggest regression analysis of SWB (and other ordinal data) should focus on the median rather than the mean. Median comparisons using parametric models such as the ordered probit and logit can be readily carried out using familiar statistical softwares like STATA. We also show a previously assumed impractical task of estimating a semiparametric median ordered-response model is also possible by using a novel constrained mixed integer optimization technique. We use GSS data to show the famous Easterlin Paradox from the happiness literature holds for the US independent of any parametric assumption.

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  • Le-Yu Chen & Ekaterina Oparina & Nattavudh Powdthavee & Sorawoot Srisuma, 2019. "Have Econometric Analyses of Happiness Data Been Futile? A Simple Truth About Happiness Scales," Papers 1902.07696, arXiv.org.
  • Handle: RePEc:arx:papers:1902.07696
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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