A Structural Model of Well-Being: With an Application to German Data

FEE, Universiteit Van Amsterdam Working Paper

34 Pages Posted: 6 Nov 2000

See all articles by B.M.S. van Praag

B.M.S. van Praag

University of Amsterdam - Faculty of Economics and Business (FEB); IZA Institute of Labor Economics; Tinbergen Institute in Amsterdam; CESifo (Center for Economic Studies and Ifo Institute)

Paul Frijters

Queensland University of Technology - School of Economics and Finance

Ada Ferrer-i-Carbonell

Institut d'Anàlisi Econòmica (IAE-CSIC), Barcelona

Date Written: August 4, 2000

Abstract

In this paper we attempt to explain individual, ordinarily comparable, satisfaction levels. We postulate a simultaneous equation model where general satisfaction is explained by exogenous shock and level variables, and by the values of the satisfactions with respect to six distinct endogenous domains of life. Taking into account that these satisfactions were categorically measured and allowing for individual effects, the model was estimated on six consecutive waves of the German Socio-Economic Panel. The results are statistically very significant and plausible.

The main conclusions of this paper are: a) Given the fact that we get stable significant and intuitively interpretable results, the assumption of interpersonal (ordinal) comparability of satisfactions cannot be rejected on the grounds that it leads to insignificant of implausible results; b) It is possible to explain satisfactions to a large extent by objectively measurable variables; c) Domain Satisfactions are strongly interrelated because of common explanatory variables; d) General Satisfaction may be seen as an aggregate of the six domain satisfactions.

JEL Classification: I31, C33

Suggested Citation

van Praag, Bernard and Frijters, Paul and Ferrer-i-Carbonell, Ada, A Structural Model of Well-Being: With an Application to German Data (August 4, 2000). FEE, Universiteit Van Amsterdam Working Paper, Available at SSRN: https://ssrn.com/abstract=243904 or http://dx.doi.org/10.2139/ssrn.243904

Bernard Van Praag (Contact Author)

University of Amsterdam - Faculty of Economics and Business (FEB) ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands
31 20 5256018 (Phone)
31 20 5256013 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Tinbergen Institute in Amsterdam

Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Paul Frijters

Queensland University of Technology - School of Economics and Finance ( email )

GPO Box 2434
2 George Street
Brisbane, Queensland 4001
Australia
(07) 3864 9364 (Phone)
(07) 3864 1500 (Fax)

HOME PAGE: http://www.bus.qut.edu.au/paulfrijters/index.jsp

Ada Ferrer-i-Carbonell

Institut d'Anàlisi Econòmica (IAE-CSIC), Barcelona ( email )

Barcelona, Bellaterra 08193
Spain

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