A Note on Modelling Dynamics in Happiness Estimations

Piper, Alan (2013): A Note on Modelling Dynamics in Happiness Estimations.

Abstract

This short note discusses two alternative ways to model dynamics in happiness regressions. A explained, this may be important when standard fixed effects estimates have serial correlation in the residuals, but is also potentially useful when serial correlation is not a problem for providing new insights in the happiness of economics area. The note discusses modelling dynamics two ways the note discusses are via a lagged dependent variable, and via an AR(1) process. The usefulness and statistical appropriateness of each is discussed with reference to happiness. Finally, a flow chart is provided summarising key decisions regarding the choice regarding, and potential necessity of, modelling dynamics.

• Item Type: MPRA Paper
• Language: English
• Keywords: Happiness, Dynamics, Lagged Dependent Variable, AR(1) process, Estimation
• Subjects: C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C23 - Panel Data Models ; Spatio-temporal Models; C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C50 - General; I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty > I31 - General Welfare, Well-Being

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