Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/85913
Authors: 
Ferrer-i-Carbonell, Ada
Frijters, Paul
Year of Publication: 
2002
Series/Report no.: 
Tinbergen Institute Discussion Paper 02-024/3
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.
Subjects: 
Fixed effects
happiness methodology
unobservables
latent variabIe models
JEL: 
C23
C25
I31
Document Type: 
Working Paper

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