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34
individual specific time-constant factors from biasing the results. However, previous
research in this literature has generally overlooked two important econometric issues that
arise in fixed effects models. First, to implement the fixed effect models in deviation
from the mean form, one must assume strictly exogeneity – i.e., the error term, , must
be uncorrelated with current, past, and future explanatory variables. This assumption is
not necessarily reasonable in this analysis because a current shock to health (or life)
satisfaction could affect one’s future health, income, or other explanatory variables.
However, if one takes the first difference of the data instead of taking deviations from the
mean, one need only assume sequential exogeneity, i.e., the error term is uncorrelated
with current and past values of the explanatory variables. I discuss below the need to use
an instrumental variable for self-reported health to account for classical measurement
errors in this model. The validity of the instruments as well as the strict assumptions
necessary for a demeaned specification suggest that a first difference model is more
appropriate than a standard fixed effects model in this context. Therefore, the main
assumption is that a shock to health satisfaction is uncorrelated with current and past
instrumental variables, as well as other explanatory variables.7
The second issue is the fact that fixed effects models will accentuate classical
measurement error (Altonji, 1986; Griliches & Hausman, 1986). Several articles have
shown that self-reported health is measured with error (see, for example, Crossley &
7 See Imbens and Wooldridge (2008, IRP lectures 3 and 4) or Wooldridge (2002, p.284) for a discussion of
strict and sequential exogeneity.
34
Object Description
| Title | Essays on health and well-being |
| Author | Zweig, Jacqueline Smith |
| Author email | smith2@usc.edu; jackiesmith04@yahoo.com |
| Degree | Doctor of Philosophy |
| Document type | Dissertation |
| Degree program | Economics |
| School | College of Letters, Arts and Sciences |
| Date defended/completed | 2011-03-23 |
| Date submitted | 2011 |
| Restricted until | Restricted until 26 Apr. 2012. |
| Date published | 2012-04-26 |
| Advisor (committee chair) |
Easterlin, Richard A. Ham, John C. |
| Advisor (committee member) | Melguizo, Tatiana |
| Abstract | This dissertation is comprised of three chapters that use microeconometric techniques to investigate the factors that affect people’s well-being. In the first two chapters, well-being is defined as life satisfaction or health satisfaction. The first chapter explores how the movement from socialism to capitalism affected the life satisfaction and health satisfaction of East Germans relative to West Germans after reunification. The second chapter examines whether women are happier, less happy, or equally happy as men in countries at various stages of development. The third chapter examines whether pollution affects the academic performance of school children; their academic performance and achievements will have important implications for their future well-being. |
| Keyword | happiness; well-being |
| Geographic subject | Germany |
| Geographic subject (state) | California |
| Geographic subject (country) | USA |
| Coverage date | 1990/2010; 2002/2008 |
| Language | English |
| Part of collection | University of Southern California dissertations and theses |
| Publisher (of the original version) | University of Southern California |
| Place of publication (of the original version) | Los Angeles, California |
| Publisher (of the digital version) | University of Southern California. Libraries |
| Provenance | Electronically uploaded by the author |
| Type | texts |
| Legacy record ID | usctheses-m3782 |
| Contributing entity | University of Southern California |
| Rights | Zweig, Jacqueline Smith |
| Repository name | Libraries, University of Southern California |
| Repository address | Los Angeles, California |
| Repository email | cisadmin@lib.usc.edu |
| Filename | etd-Zweig-4500 |
| Archival file | uscthesesreloadpub_Volume23/etd-Zweig-4500.pdf |
Description
| Title | Page 43 |
| Contributing entity | University of Southern California |
| Repository email | cisadmin@lib.usc.edu |
| Full text | 34 individual specific time-constant factors from biasing the results. However, previous research in this literature has generally overlooked two important econometric issues that arise in fixed effects models. First, to implement the fixed effect models in deviation from the mean form, one must assume strictly exogeneity – i.e., the error term, , must be uncorrelated with current, past, and future explanatory variables. This assumption is not necessarily reasonable in this analysis because a current shock to health (or life) satisfaction could affect one’s future health, income, or other explanatory variables. However, if one takes the first difference of the data instead of taking deviations from the mean, one need only assume sequential exogeneity, i.e., the error term is uncorrelated with current and past values of the explanatory variables. I discuss below the need to use an instrumental variable for self-reported health to account for classical measurement errors in this model. The validity of the instruments as well as the strict assumptions necessary for a demeaned specification suggest that a first difference model is more appropriate than a standard fixed effects model in this context. Therefore, the main assumption is that a shock to health satisfaction is uncorrelated with current and past instrumental variables, as well as other explanatory variables.7 The second issue is the fact that fixed effects models will accentuate classical measurement error (Altonji, 1986; Griliches & Hausman, 1986). Several articles have shown that self-reported health is measured with error (see, for example, Crossley & 7 See Imbens and Wooldridge (2008, IRP lectures 3 and 4) or Wooldridge (2002, p.284) for a discussion of strict and sequential exogeneity. 34 |
