Subjective well-being and the family: Results from an ordered probit model with multiple random effects

The previous literature on the determinants of individual well-being has failed to fully account for the interdependencies in well-being at the family level. This paper develops an ordered probit model with multiple random effects that allows to identify the intra-family correlation in well-being. The parameters of the model can be estimated with panel data using Maximum Marginal Likelihood. The approach is illustrated in an application using data for the period 1984–1997 from the German Socio-Economic Panel in which both inter-generational and intra-marriage correlations in well-being are estimated.First version received: May 2003/Final version received: August 2004I would like to thank Andrew Clark, Daniel S. Hamermesh, seminar participants at Tilburg University, and three anonymous referees for helpful comments.