How important is Methodology for the Estimates of the Determinants of Happiness?

Ada Ferrer-i-Carbonell and Paul Frijters

No 02-024/3, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: Psychologists and sociologists usually interpret answers to happiness surveys as cardinal and comparableacross respondents (Kahneman et al. 1999). As a result, these social scientists run OLS regressionson happiness and changes in happiness. Economists, on the other hand, usually only assume ordinalcomparability and have mainly used ordered latent response models. As a consequence, economists haveby and large not taken satisfactory account of fixed individual traits. We address this latter problemby developing a conditional estimator for the fixed-effect ordered logit model. The empirical findingspresented show that it makes virtually no difference whether one assumes ordinality or cardinality ofhappiness answers, whilst allowing for fixed-effects does change results substantially. This leads us toadvocate allowing for and endogenising the persistent personality traits that make up these fixed-effects.

Keywords: Fixed effects; happiness methodology; unobservables; latent variabIe models (search for similar items in EconPapers)
JEL-codes: C23 C25 I31 (search for similar items in EconPapers)
Date: 2002-03-06
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Citations: View citations in EconPapers (10)

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Related works:
Journal Article: How Important is Methodology for the estimates of the determinants of Happiness? (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20020024

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