June 1, 2008
We consider the issue of the dynamics of perceptions, as expressed in responses to survey questions on subjective wellbeing. We develop a simulated maximum likelihood method for estimation of dynamic linear models, where the dependent variable is partially observed through ordinal scales. This latent auto-regression model is often more appropriate than the usual state dependence model for attitudinal and interval variables. The paper contains an application to a model of households’ perceptions of their financial wellbeing, demonstrating the superior fit of the latent auto-regression model to both the usual static model and the state dependence model.
Journal of the Royal Statistical Society Series A (Statistics in Society)
Volume and page numbers
Volume: 171 (1):21-40 , p.21 -41
Originally 'Online Early' 19 Nov.2007
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