Abstract
This paper explores the relationship between different types of relational goods and well-being and examines if there is latent/unobserved heterogeneity in this relationship by applying the latent class ordered probit model. This unique contribution to the literature examines if some individuals have a more associative disposition than others which contributes to their subjective well-being through the consumption of relational goods. As well as relational goods that have been well researched, such as marital status and household composition, this paper explores participation in sports, arts and cultural activities, as well as attendance at events or facilities for these activities, heritage visits, volunteering, and gambling.
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Notes
Different levels of aggregation also underpin the instruments used in Becchetti et al. [2012].
One tranche of data was employed to limit the computational burden placed on the software by estimating the LC model. As the data series are not part of a panel no loss of opportunity to exploit the heterogeneity in the data is really entailed.
In what follows the happiness categories were merged into three bands to facilitate estimation.
See, for example, Hair et al. [2006]. In factor analysis, the sign and size of factor loadings, that is correlations between particular variables and the latent constructs to which they are identified, are used to interpret the latent construct.
Strictly the marginal effects are required to make this claim about magnitude. For brevity these are omitted but available from the authors on request.
While the marginal effects add some additional insights into the analysis, the allocation of specific individuals to each class is probabilistic, so it would be potentially misleading to estimate separate ordered models subsequent to the identification of the classes, for example, as indicated in equation (4).
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Rasciute, S., Downward, P. & Greene, W. Do Relational Goods Raise Well-Being? An Econometric Analysis. Eastern Econ J 43, 563–579 (2017). https://doi.org/10.1057/eej.2015.46
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DOI: https://doi.org/10.1057/eej.2015.46