Victoria University

Personality, well-being and the marginal utility of income: What can we learn from random coefficient models?

ResearchArchive/Manakin Repository

Show simple item record Schurer, Stefanie Yong, Jongsay 2012-02-24T02:49:22Z 2012-02-24T02:49:22Z 2012 2012
dc.description.abstract Fixed effects models are the gold standard in empirical well-being research, however, their applicability is limited to controlling for intercept heterogeneity and identifying effects of time-varying variables. This paper investigates the usefulness of random coefficient models in controlling for heterogeneity in well-being and the marginal utility of income, and explores whether these forms of heterogeneity depend on the Big-Five personality traits. Using unique Australian longitudinal data that have personality measures available in two time periods we show that a Mundlak-adjusted random coefficient model yields almost identical results as the fixed effects model, making it a powerful modelling alternative when interest lies in multiple forms of heterogeneity. Big-Five personality explains 10 percent of the variation in intercept heterogeneity and 6-7 percent of the variation in the marginal utility of income. For women, we suggest that the marginal utility of income is significantly linked to personality, implying important gender-differences in the expected effectiveness of financial incentives to influence behaviour. en_NZ
dc.language.iso en_NZ
dc.relation.ispartofseries SEF Working Paper Series en_NZ
dc.subject Subjective well-being en_NZ
dc.subject Marginal utility of income en_NZ
dc.subject Heterogeneity en_NZ
dc.subject Personality en_NZ
dc.subject Random coefficient models en_NZ
dc.title Personality, well-being and the marginal utility of income: What can we learn from random coefficient models? en_NZ
dc.type Text en_NZ
vuwschema.contributor.unit School of Economics and Finance en_NZ
vuwschema.subject.marsden 149999 Economics not elsewhere specified en_NZ
vuwschema.type.vuw Working or Occasional Paper en_NZ
dc.rights.rightsholder en_NZ

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