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IZA
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Heterogeneity in Reported Well-Being: Evidence from Twelve European Countries
by
Andrew E. Clark, Fabrice Etilé, Fabien Postel-Vinay, Claudia Senik, Karine Van der Straeten
(October 2004)
published in: Economic Journal, 2005, 115 (502), C118-C132
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.
Text: See Discussion Paper No. 1339 
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