Single-variable threshold effects in ordered response models with an application to estimating the income-Happiness gradient

Hodge, Andrew and Shankar, Sriram (2016) Single-variable threshold effects in ordered response models with an application to estimating the income-Happiness gradient. Journal of Business and Economic Statistics, 34 1: 42-52. doi:10.1080/07350015.2014.991785


Author Hodge, Andrew
Shankar, Sriram
Title Single-variable threshold effects in ordered response models with an application to estimating the income-Happiness gradient
Journal name Journal of Business and Economic Statistics   Check publisher's open access policy
ISSN 0735-0015
1537-2707
Publication date 2016
Year available 2014
Sub-type Article (original research)
DOI 10.1080/07350015.2014.991785
Open Access Status Not Open Access
Volume 34
Issue 1
Start page 42
End page 52
Total pages 31
Place of publication Philadelphia, PA, United States
Publisher Taylor and Francis
Collection year 2017
Language eng
Formatted abstract
This short paper extends well-known threshold models to the ordered response setting. We consider the case where the sample is endogenously split to estimate regime-dependent coefficients for one variable of interest, while keeping the other coefficients and auxiliary parameters constant across the threshold. We use Monte Carlo methods to examine the behaviour of the model. In addition we derive the formulae for the partial effects associated with the model.  We apply our threshold model to the relationship between income and self-reported happiness using data drawn from the US General Social Survey. While the findings suggest the presence of a threshold in the income-happiness gradient at approximately $US76,000, no evidence is found in support of a satiation point.
Keyword Ordered response threshold model
Easterlin Paradox
Happiness
Partial effects
Q-Index Code C1
Q-Index Status Provisional Code
Institutional Status UQ

Document type: Journal Article
Sub-type: Article (original research)
Collections: HERDC Pre-Audit
School of Public Health Publications
 
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Created: Mon, 12 Jan 2015, 12:36:55 EST by Dr Andrew Hodge on behalf of School of Public Health