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Adult life satisfaction: largely (though not wholly) contemporaneous? A System General Method of Moments dynamic panel analysis

Piper, Alan T. (2018): Adult life satisfaction: largely (though not wholly) contemporaneous? A System General Method of Moments dynamic panel analysis.

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Abstract

This study discusses and employs System Generalised Methods of Moments (GMM) dynamic panel analysis to investigate adult life satisfaction. This method enables an investigation of the dynamics of life satisfaction, and is undertaken with and without lags of the independent variables. The results indicate that, for this particular dynamic panel model, life satisfaction is largely (though not wholly) contemporaneous. Some caveats are offered with this general result, and nuance provided with the inclusion of lagged independent variables. A key exception is with regard to health, with past and current health contributing significantly to current life satisfaction. Given the complexity of the econometric method and its limited previous use in the well-being area, advice is given and potential pitfalls highlighted. Furthermore, while static models (like fixed effects) omit dynamics and are often misspecified, the results from the dynamic panel analysis are supportive of the more common fixed effects analysis.

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