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Why Some People Are Not As Happy As They Could Be: The Role of Unobservable Subjective Factors

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  • AMENDOLA, Adalgiso

    (CELPE - Centre of Labour Economics and Economic Policy, University of Salerno - Italy)

  • DELL'ANNO, Roberto

    (CELPE - Centre of Labour Economics and Economic Policy, University of Salerno - Italy)

  • PARISI, Lavinia

    (CELPE - Centre of Labour Economics and Economic Policy, University of Salerno - Italy)

Abstract

This paper investigates the relative importance of unobservable subjective factors (i.e., genetic, personality, cognitive traits) on happiness. We apply a residual-based approach to distinguish between the direct and indirect effects of unobservable subjective traits on happiness. We refer to the “indirect” effects as the effects of unobservable variables on happiness mediated by social, economic and family factors. We find that these “indirect” effects only explain approximately 25% of the happiness variation at the individual level, while unobserved (i.e. genetic and personality) traits may explain up to 75% of the differences in happiness. We also find that socioeconomic, demographical and institutional factors better explain the variance of happy versus unhappy people. The empirical analysis is based on the European Quality of Life Survey dataset.

Suggested Citation

  • AMENDOLA, Adalgiso & DELL'ANNO, Roberto & PARISI, Lavinia, 2020. "Why Some People Are Not As Happy As They Could Be: The Role of Unobservable Subjective Factors," CELPE Discussion Papers 162, CELPE - Centre of Labour Economics and Economic Policy, University of Salerno, Italy.
  • Handle: RePEc:sal:celpdp:0162
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    References listed on IDEAS

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    More about this item

    Keywords

    Happiness; Unobservable traits; Subjective well-being; Unhappiness; Genes;
    All these keywords.

    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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