TY  - RPRT
        AU  - Boes, Stefan
AU  - Winkelmann, Rainer
        TI  - Income and Happiness: New Results from Generalized Threshold and Sequential Models
        PY  - 2004/Jun/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 1175
        UR  - https://www.iza.org/index.php/publications/dp1175
        AB  - 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.
        KW  - subjective well-being
KW  - ordered response models
KW  - marginal effects
        ER  -