A Hierarchical Ordinal Probit Model for the Analysis of Life Satisfaction in Italy

The aim of this paper is to study the individual and contextual determinants of life satisfaction in Italy. A hierarchical probit model is proposed for studying data with group structure and an ordinal response variable. The group structure is defined by the presence of micro observations embedded with regional contexts (macro observations), and the specification is at both of these levels. The methodology is applied to Eurobarometer survey data, with individuals viewed as micro observations and regions as macro observations. We find that Italy is not an homogeneous country with respect to life satisfaction, and that the regional environment contributes with the observed and unobserved characteristics of the individuals to life satisfaction level.