Heterogeneity in Reported Well-Being: Evidence from Twelve European Countries

29 Pages Posted: 11 Oct 2004

See all articles by Andrew Clark

Andrew Clark

Paris School of Economics (PSE); IZA Institute of Labor Economics

Fabrice Etile

INRA-ALISS; PSE

Fabien Postel-Vinay

University of Bristol; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics; Centre for Structural Econometrics (CSE)

Claudia Senik

National Center for Scientific Research - Department and Laboratory of Applied and Theoretical Economics (DELTA); Universite Paris IV Sorbonne; IZA Institute of Labor Economics

Karen Van der Straeten

Ecole Polytechnique, Paris

Multiple version iconThere are 2 versions of this paper

Date Written: October 2004

Abstract

This paper models the relationship between income and reported well-being using latent class techniques applied to panel data from twelve European countries. Introducing both intercept and slope heterogeneity into this relationship, we strongly reject the hypothesis that individuals transform income into well-being in the same way. We show that both individual characteristics and country of residence are strong predictors of the four classes we identify. We expect that differences in the marginal effect of income on well-being across classes will be reflected in both behaviour and preferences for redistribution.

Keywords: income, utility, well-being, heterogeneity, latent class

JEL Classification: C14, C23, I30

Suggested Citation

Clark, Andrew Eric and Etile, Fabrice and Postel-Vinay, Fabien and Senik, Claudia and Van der Straeten, Karen, Heterogeneity in Reported Well-Being: Evidence from Twelve European Countries (October 2004). IZA Discussion Paper No. 1339. Available at SSRN: https://ssrn.com/abstract=602481

Andrew Eric Clark (Contact Author)

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

IZA Institute of Labor Economics

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

Fabrice Etile

INRA-ALISS ( email )

65, Boulevard de Brandebourg
Ivry-sur-Seine, 94205
France

PSE ( email )

48 bd Jourdan
Paris, 75014
France

Fabien Postel-Vinay

University of Bristol ( email )

University of Bristol,
Senate House, Tyndall Avenue
Bristol, BS8 ITH
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

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

Centre for Structural Econometrics (CSE) ( email )

Department of Economics, University of Bristol
8 Woodland Road
Bristol, BS8 1TN
United Kingdom

Claudia Senik

National Center for Scientific Research - Department and Laboratory of Applied and Theoretical Economics (DELTA) ( email )

ENS, 48, bd Jourdan
75014 Paris
France
+33 1 4313 6312 (Phone)

Universite Paris IV Sorbonne

Department of Economics
75230 Paris Cedex 05
France
01 43 13 63 12 (Phone)

IZA Institute of Labor Economics

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

Karen Van der Straeten

Ecole Polytechnique, Paris ( email )

1 rue Descartes
Paris, 75005
France

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