Assessing the role of components of life satisfaction

Shui Ki WAN*, Long Zhao

*Corresponding author for this work

    Research output: Contribution to journalJournal articlepeer-review

    5 Citations (Scopus)


    Factors affecting subjective well-being and their gross effect measurement have been widely studied. However, how people derive utility from these factors has not been fully explored. This article provides a way to decompose the gross effect of major determinants on life satisfaction into direct and indirect effects and make inference for the latter. Because the indirect effect is nonlinear in parameters associated with different models in an equation system, it creates a problem in estimating the standard error. Besides, the categorical nature in survey data further introduces bias to the covariance estimation even asymptotically. To address these issues without knowing the form of heteroskedasticity under the null hypothesis, we propose to extend the wild bootstrap procedure in this particular context. Its robustness against various data properties is validated via several simulation experiments. Using three recent waves of World Values Survey, we find that the relative importance of life control has significantly increased recently, and endowing citizens with the right to enjoy their freedoms and liberties is a more effective policy in raising life satisfaction than promoting national income.

    Original languageEnglish
    Pages (from-to)4763-4773
    Number of pages11
    JournalApplied Economics
    Issue number44
    Publication statusPublished - 20 Sept 2018

    Scopus Subject Areas

    • Economics and Econometrics

    User-Defined Keywords

    • financial satisfaction
    • life control
    • Life satisfaction
    • wild bootstrap


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