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A Structural Model of Well-being: with an application to German Data

Author

Listed:
  • Bernard M.S. van Praag

    (University of Amsterdam)

  • P. Frijters

    (Vrije Universiteit Amsterdam)

  • A. Ferrer-i-Carbonell

    (University of Amsterdam)

Abstract
In this paper we attempt to explain individual, ordinally comparable,satisfaction levels. We postulate a simultaneous equation model where general satisfaction isexplained by exogenous shock and level variables, and by the values of the satisfactionswith respect to six distinct endogenous domains of life. Taking into account that thesesatisfactions were categoricallymeasured and allowing for individual effects, the model was estimatedon six consecutive waves of the German Socio-Economic Panel. The results are statistically verysignificant and plausible.The main conclusions of this paper are:given the fact thatwe get stable significant andintuitively interpretable results, the assumption of interpersonal(ordinal) comparability ofsatisfactions cannot be rejected on the grounds that it leads toinsignificant or implausible results;It is possible to explain satisfactions to a large extent byobjectively measurable variables;Domain Satisfactions are strongly interrelated because of commonexplanatory variables;General Satisfaction may be seen as an aggregate of the six domainsatisfactions.

Suggested Citation

  • Bernard M.S. van Praag & P. Frijters & A. Ferrer-i-Carbonell, 2000. "A Structural Model of Well-being: with an application to German Data," Tinbergen Institute Discussion Papers 00-053/3, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20000053
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    References listed on IDEAS

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    9. Bernard M.S. van Praag & Paul Frijters, 1999. "The structure of German well-being," School of Economics and Finance Discussion Papers and Working Papers Series 071b, School of Economics and Finance, Queensland University of Technology.
    10. Jennifer Hunt, 2000. "Why Do People Still Live in East Germany?," NBER Working Papers 7564, National Bureau of Economic Research, Inc.
    11. Frijters, Paul, 2000. "Do individuals try to maximize general satisfaction?," Journal of Economic Psychology, Elsevier, vol. 21(3), pages 281-304, June.
    12. Ulf Olsson, 1979. "Maximum likelihood estimation of the polychoric correlation coefficient," Psychometrika, Springer;The Psychometric Society, vol. 44(4), pages 443-460, December.
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    14. van Praag, Bernard M. S., 1991. "Ordinal and cardinal utility : An integration of the two dimensions of the welfare concept," Journal of Econometrics, Elsevier, vol. 50(1-2), pages 69-89, October.
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    Cited by:

    1. Ada Ferrer‐i‐Carbonell & Bernard M.S. van Praag, 2002. "The subjective costs of health losses due to chronic diseases. An alternative model for monetary appraisal," Health Economics, John Wiley & Sons, Ltd., vol. 11(8), pages 709-722, December.
    2. Hanna Dudek & Joanna Landmesser, 2012. "Income satisfaction and relative deprivation," Statistics in Transition new series, Główny Urząd Statystyczny (Polska), vol. 13(2), pages 321-334, June.
    3. van Praag, Bernard M. S. & Ferrer-i-Carbonell, Ada, 2001. "Age-Differentiated QALY Losses," IZA Discussion Papers 314, Institute of Labor Economics (IZA).
    4. Sandra Castro-González & Sara Fernández-López & Lucía Rey-Ares & David Rodeiro-Pazos, 2020. "The Influence of Attitude to Money on Individuals’ Financial Well-Being," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 148(3), pages 747-764, April.
    5. Ada Ferrer-i-Carbonell, 2002. "Subjective Questions to Measure Welfare and Well-being," Tinbergen Institute Discussion Papers 02-020/3, Tinbergen Institute.
    6. Ferrer-i-Carbonell, Ada & van Praag, Bernard M. S., 2001. "The Subjective Costs of Health Losses due to Chronic Diseases: An Alternative Model Appraisal," IZA Discussion Papers 313, Institute of Labor Economics (IZA).
    7. Ferrer-i-Carbonell, Ada & van Praag, Bernard M. S., 2001. "Poverty in the Russian Federation," IZA Discussion Papers 259, Institute of Labor Economics (IZA).
    8. repec:fgv:epgrbe:v:66:n:4:a:1 is not listed on IDEAS
    9. Ada Ferrer-i-Carbonell & Bernard Van Praag, 2001. "Poverty in Russia," Journal of Happiness Studies, Springer, vol. 2(2), pages 147-172, June.
    10. Frijters, Paul & Beatton, Tony, 2012. "The mystery of the U-shaped relationship between happiness and age," Journal of Economic Behavior & Organization, Elsevier, vol. 82(2), pages 525-542.
    11. Leonardo Becchetti & Elena Giachin Ricca & Alessandra Pelloni, 2009. "The 60es turnaround as a test on the causal relationship between sociability and happiness," Econometica Working Papers wp07, Econometica.
    12. Paul Gerrans & Craig Speelman & Guillermo Campitelli, 2014. "The Relationship Between Personal Financial Wellness and Financial Wellbeing: A Structural Equation Modelling Approach," Journal of Family and Economic Issues, Springer, vol. 35(2), pages 145-160, June.
    13. Hanna Dudek, 2008. "Subjective aspects of economic poverty. Ordered response model approach," Working Papers 29, Department of Applied Econometrics, Warsaw School of Economics.
    14. Carvalho, José Raimundo & Marinho, Emerson & Loria, Francesca, 2012. "Idleness, Returns to Education and Child Labor," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 66(4), December.
    15. Ada Ferrer-i-Carbonell, 2002. "Income and Well-being," Tinbergen Institute Discussion Papers 02-019/3, Tinbergen Institute.
    16. Steffen Westermann & Scott J. Niblock & Jennifer L. Harrison & Michael A. Kortt, 2020. "Financial Advice Seeking: A Review of the Barriers and Benefits," Economic Papers, The Economic Society of Australia, vol. 39(4), pages 367-388, December.

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