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. As 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 investigations within the happiness of economics area. The two ways the note discusses modelling dynamics 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 about, 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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