An analysis of life satisfaction in Albania: An heteroscedastic ordered probit model approach

Julie Litchfield, Barry Reilly and Mario Veneziani

Journal of Economic Behavior & Organization, 2012, vol. 81, issue 3, 731-741

Abstract: This paper uses the nationally representative Albanian Living Standards Measurement Study survey from 2005 to investigate the determinants of life satisfaction. In common with much of the existing empirical literature that models life satisfaction (or subjective well-being) this paper exploits an ordered probit model. In contrast to the existing literature, however, the current study places an important emphasis on regression model evaluation. Diagnostic testing revealed a number of econometric model deficiencies but the explicit incorporation of a variance function into the ordered probit model resolved all detected problems. The tenor of the key findings generally reflects that found in the literature on the determinants of life satisfaction for both advanced capitalist and transitional economies. However, a number of additional themes with a strong Albanian dimension were interrogated. In particular, our study revealed evidence of long memories among Albanian respondents with respect to the collapse of that country's notorious pyramid schemes and the scarring effects of the episode continue to impact on life satisfaction even with the passage of almost eight years. A sizeable effect for communal level criminal activity on life satisfaction was also detected. In addition, our econometric estimates also provided some empirical insights on the monetary value of friendship and the costs of children.

Keywords: Ordered probit; Heteroscedasticity; Albania (search for similar items in EconPapers)
JEL-codes: C25 D60 I31 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167268111000321
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:81:y:2012:i:3:p:731-741

DOI: 10.1016/j.jebo.2010.12.020

Access Statistics for this article

Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

More articles in Journal of Economic Behavior & Organization from Elsevier
Bibliographic data for series maintained by Catherine Liu ().