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

Stefan Boes and Rainer Winkelmann

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

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: C23 D12 I31 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2006-05
New Economics Papers: this item is included in nep-dcm and nep-soc
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Citations: View citations in EconPapers (44)

Published in Social Indicators Research 95, pp. 111�128, 2010

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Persistent link: https://EconPapers.repec.org/RePEc:soz:wpaper:0605

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