The Richer, the Happier? An Empirical Investigation in Selected European Countries

This study analyses the relationship between subjective and objective measures of well-being in selected European countries using the data of the European Community Household Panel (ECHP). In the first part of the paper, we develop a random-effect ordered probit model, separately for each country, relating the subjective measure of income satisfaction to actual income, and controlling for some individual and household socio-demographic fixed effects. In the second part of the paper, we fit a Bayesian cross-classified multilevel model, in order to control for intra-family correlation in subjective well-being, which actually appears to be present. The research was financially supported by the Italian Ministry of University and Scientific Research and by the 5th European Research Programme (FELICIE – Future Elderly Living Conditions In Europe, No. QLRT-2001-02310, http://www.felicie.org). We gratefully acknowledge the contribution of an anonymous referee.