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Journal Article

Optimism, pessimism and the compensating income variation of cardiovascular disease: a two-tiered quality of life stochastic frontier model


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Self-reported measures of life satisfaction may be biased by optimistic or pessimistic dispositions of respondents. In this paper we view life satisfaction as stochastic and estimate a two-tiered quality of life stochastic frontier model to account for upward and downward biases in self-reported quality of life questions. Using the British Household Panel Survey 1995, we interpret the two one-sided errors to represent optimism and pessimism, respectively. The results suggest that the realistic values of life satisfaction are closer to the pessimistic values than to the optimistic ones. It is further found that men are relatively more optimistic and less pessimistic than women. Cardiovascular disease makes people both less optimistic and less pessimistic. The results are used to calculate the compensating income variation (CIV) of cardiovascular disease. It is found that the CIV is substantial.

Published in

Social Science and Medicine


65 (7):1479-1489


Well Being and Health



Previously 'In press, corrected proof'; Albert Sloman Library Periodicals *restricted to Univ. Essex registered users*

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