An Analysis of Life Satisfaction in Albania: An Heteroscedastic Ordered Probit Model Approach

Julie Litchfield, Barry Reilly and Mario Veneziani

Working Paper Series from Department of Economics, University of Sussex Business School

Abstract: This paper uses the nationally representative Albanian Living Standards Measurement Survey from 2005 to investigate the determinants of life satisfaction. In common with much of the existing empirical economics 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 an heteroscedastic 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 crime activity on life satisfaction was also detected. In addition, our econometric estimates provided some empirical insights on the monetary value of friendship and the costs of children.

Keywords: Albania; life satisfaction; household welfare; ordered probit model; heteroscedasticity (search for similar items in EconPapers)
JEL-codes: C25 D60 I31 (search for similar items in EconPapers)
Date: 2010-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sussex.ac.uk/economics/documents/wps-3-2010/pdf (application/pdf)

Related works:
Journal Article: An analysis of life satisfaction in Albania: An heteroscedastic ordered probit model approach (2012)
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:sus:susewp:0310

Access Statistics for this paper

More papers in Working Paper Series from Department of Economics, University of Sussex Business School Contact information at EDIRC.
Bibliographic data for series maintained by University of Sussex Business School Communications Team ().