The Effect of Income on Positive and Negative Subjective Well-Being

Stefan Boes () and Rainer Winkelmann ()

No 605, Working Papers from University of Zurich, Socioeconomic Institute

Abstract: Increasing evidence from the empirical economic and psychological literature suggests that positive and negative well-being are more than opposite ends of the same phenomenon. Two separate measures of the dependent variable may be needed when analyzing the determinants of subjective well-being. We argue that this conclusion reflects in part the use of too restrictive econometric models. A flexible multiple-index ordered probit panel data model with varying thresholds can identify response asymmetries in single-item measures of subjective well-being. An application to data from the German Socio-Economic Panel for 1984-2004 shows that income has only a minor effect on positive subjective well-being but a large effect on negative well-being.

Keywords: generalized ordered probit model; marginal probability effects; random and fixed effects; life-satisfaction (search for similar items in EconPapers)
JEL-codes: I31 D12 C23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dcm and nep-soc
Date: 2006-05
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Persistent link: http://EconPapers.repec.org/RePEc:soz:wpaper:0605

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