published in: Social Indicators Research, 2010, 95 (1), 111-128
Empirical studies on the relationship between income and happiness commonly use standard
ordered response models, the most well-known representatives being the ordered logit and
the ordered probit. However, these models restrict the marginal probability effects by design,
and therefore limit the analysis of distributional aspects of a change in income, that is, the
study of whether the income effect depend on a person's happiness. In this paper we
pinpoint the shortcomings of standard models and propose two alternatives, namely
generalized threshold and sequential models. With data of two waves of the German Socio-
Economic Panel, 1984 and 1997, we show that the more general models yield different
marginal probability effects than standard models.
We use cookies to provide you with an optimal website experience. This includes cookies that are necessary for the operation of the site as well as cookies that are only used for anonymous statistical purposes, for comfort settings or to display personalized content. You can decide for yourself which categories you want to allow. Please note that based on your settings, you may not be able to use all of the site's functions.
Cookie settings
These necessary cookies are required to activate the core functionality of the website. An opt-out from these technologies is not available.
In order to further improve our offer and our website, we collect anonymous data for statistics and analyses. With the help of these cookies we can, for example, determine the number of visitors and the effect of certain pages on our website and optimize our content.