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Research Paper

Identifying causal effects with panel data: the case of friendship and happiness

Authors

Publication date

01 Oct 2005

Abstract

Previous attempts at estimating causal relationships between the extent of social
contact with friends and happiness rely heavily on standard cross-section econometric
techniques, and therefore do not control for unobserved inborn heterogeneity and
time-varying endogeneity. Using a rich panel dataset from the British Household
Panel Survey, this paper estimates micro-econometric life satisfaction equations and
exploit both single and simultaneous equations panel data estimators to address both
sources of endogeneity: unobserved heterogeneity and time-variant endogeneity.
Conditioning on these unobservables, I find a strong causal effect of friendship on
happiness, which has been greatly understated at the cross-section.

Subjects

Econometrics, Well Being, and Social Capital

Links

http://www2.warwick.ac.uk/fac/soc/economics/research/phds/n.powdthavee/friend_happiness2005.pdf


Related publications

  1. Why life's little pleasures are worth so much

    Nattavudh Powdthavee

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