Publication type
Journal Article
Author
Publication date
June 1, 2010
Abstract:
There is a long tradition of psychologists finding small income effects on life satisfaction (or happiness). Yet the issue of income endogeneity in life satisfaction equations has rarely been addressed. The present paper is an attempt to estimate the causal effect of income on happiness. Instrumenting for income and allowing for unobserved heterogeneity result in an estimated income effect that is almost twice as large as the estimate in the basic specification. The results call for a reexamination on previous findings that suggest money buys little happiness, and a reevaluation on how the calculation of compensatory packages to various shocks in the individual’s life events should be designed
Published in
Empirical Economics
Volume
Volume: 39 (1):77-92
DOI
http://dx.doi.org/10.1007/s00181-009-0295-5
Subjects
Notes
Online in A/S except current year
Originally 'Online First' 25 Apr.2009
Albert Sloman Library Periodicals *restricted to Univ. Essex registered users*
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