Skip to content

Research Paper

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


Publication date

01 Oct 2005


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.


Econometrics, Well Being, and Social Capital


Related publications

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

    Nattavudh Powdthavee


Research home

Research home


Latest findings, new research

Publications search

Search all research by subject and author


Researchers discuss their findings and what they mean for society


Background and context, methods and data, aims and outputs


Conferences, seminars and workshops

Survey methodology

Specialist research, practice and study

Taking the long view

ISER's annual report


Key research themes and areas of interest