Estimating the Causal Effects of Income on Happiness
Nattavudh Powdthavee ()
Discussion Papers from Department of Economics, University of York
There is a long tradition of psychologists finding small income effects on life satisfaction (or happiness). Yet the issue of income endogeneity in life satisfaction equations has rarely been addressed. This paper aims to do just that. Instrumenting for income and allowing for unobserved heterogeneity result in an estimated income effect that is almost twice as large as the estimate in the basic specification. The results call for a reexamination on previous findings that suggest money buys little happiness, and a reevaluation on how the calculation of compensatory packages to various shocks in the individual's life events should be designed.
New Economics Papers: this item is included in nep-hap, nep-hpe and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (3) Track citations by RSS feed
Downloads: (external link)
http://www.york.ac.uk/media/economics/documents/discussionpapers/2009/0902.pdf Main text (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: http://EconPapers.repec.org/RePEc:yor:yorken:09/02
Access Statistics for this paper
More papers in Discussion Papers from Department of Economics, University of York
Address: Department of Economics and Related Studies, University of York, York, YO10 5DD, United Kingdom
Contact information at EDIRC.
Series data maintained by Paul Hodgson ().