Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2002-03-06
Number: 02-024/3
Author-Name: Ada Ferrer-i-Carbonell
Author-Email: a.ferrercarbonell@uva.nl
Author-Workplace-Name: Faculty of Economics and Econometrics, and SEO, Amsterdam Economics, University of Amsterdam
Author-Name: Paul Frijters
Author-Email: pfrijters@feweb.vu.nl
Author-Workplace-Name: Dept. of General Economics, Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam
Title: How important is Methodology for the Estimates of the Determinants of Happiness?
Abstract: Psychologists and sociologists usually interpret answers to happiness surveys as cardinal and comparableacross respondents (Kahneman et al. 1999). As a result, these social scientists run OLS regressionson happiness and changes in happiness. Economists, on the other hand, usually only assume ordinalcomparability and have mainly used ordered latent response models. As a consequence, economists haveby and large not taken satisfactory account of fixed individual traits. We address this latter problemby developing a conditional estimator for the fixed-effect ordered logit model. The empirical findingspresented show that it makes virtually no difference whether one assumes ordinality or cardinality ofhappiness answers, whilst allowing for fixed-effects does change results substantially. This leads us toadvocate allowing for and endogenising the persistent personality traits that make up these fixed-effects.
Classification-JEL: C23; C25; I31
Keywords: Fixed effects; happiness methodology; unobservables; latent variabIe models
File-Url: https://papers.tinbergen.nl/02024.pdf
File-Format: application/pdf
File-Size: 354501 bytes
Handle: RePEc:tin:wpaper:20020024