How Important is Methodology for the Estimates of the Determinants of Happiness?

Psychologists and sociologists usually interpret happiness scores as cardinal and comparable across respondents, and thus run OLS regressions on happiness and changes in happiness. Economists usually assume only ordinality and have mainly used ordered latent response models, thereby not taking satisfactory account of xed individual traits. We address this problem by developing a conditional estimator for the xed-eect ordered logit model. We nd that assuming ordinality or cardinality of happiness scores makes little dierence, whilst allowing for xed-eects does change results substantially. We call for more research into the determinants of the personality traits making up these xed-eects.