Using a multilevel modelling approach to explain the influence of economic development on the subjective well-being of individuals

Matic Novak and Marko Pahor

Economic Research-Ekonomska Istraživanja, 2017, vol. 30, issue 1, 705-720

Abstract: Individual-level factors and country-level determinants influence our satisfaction; therefore, the single-level models that prevail in the analyses of subjective well-being are not appropriate. Thus, this article aims to add a multilevel perspective to the understanding of self-reported well-being. We analyse the impact of gross national income on the life satisfaction of individuals. We develop a two-level regression model based on the existing ‘economics of happiness’ literature. Factors describing an individual’s characteristics are included at the within level, measures describing the social situation are included at both levels, while a nation’s income, inflation and unemployment rates are between-level variables. In order to obtain the moderating effects of gross national income per capita on the influence of individuals’ relative incomes, a random intercept and random intercept-random slope model are tested using the cross-sectional data from the last wave of the World Values Survey. Our results support the hypotheses that the impact of relative income on subjective well-being decreases with the development of a country.

Date: 2017
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DOI: 10.1080/1331677X.2017.1311229

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