SWB in Portugal

Soc Indic Res (2016) 126:1375–1399
DOI 10.1007/s11205-015-0938-1
The Structure of Subjective Well-Being and Its

Determinants: A Micro-Data Study for Portugal
Elias Soukiazis1 • Sara Ramos1
Accepted: 8 March 2015 / Published online: 13 March 2015

Springer Science+Business Media Dordrecht 2015
Abstract The Subjective Well-Being status has gained a growing research attention in
social sciences during the last decades. The attention given by the academic world to this
issue has been followed by the community in general. This line of research is still unde-
veloped in Portugal, and therefore needs further investigation. The purpose of this study is
to analyze the determinants of Life Satisfaction and Happiness, two dimensions of Sub-
jective Well-Being of the Portuguese citizens using micro-data from the European Quality
of Life Survey. Ordinary Least Squares regressions and Ordinal Logistic models are es-
timated to identify the main factors that explain well-being in Portugal. We find that trust
in public institutions, satisfaction with material conditions, volunteering activities and
employment status have a positive and significant effect on Life Satisfaction. Our evidence
also shows that satisfaction with family, satisfaction with material conditions, participation
in sport activities, optimism and the marital status are relevant factors in explaining citi-
zen’s Happiness in Portugal. The results are similar using Ordinary Least Squares or
Maximum Likelihood estimation techniques on ordinal logistic models.
Keywords Factor analysis Happiness Life satisfaction Ordinal logit models

Subjective Well-Being
1 Introduction
The analysis of the Subjective Well-Being (SWB) is a subject of great importance in the
design, application and evaluation of the social and economic policies. In an environment
characterized by cultural, social and economic inequalities, these subjects of well-being
& Elias Soukiazis

elias@fe.uc.pt
Sara Ramos
ramoss_99@hotmail.com
1
Faculty of Economy, University of Coimbra, Coimbra, Portugal
123
1376 E. Soukiazis, S. Ramos
and quality of life play an important role not only from the social perspective but also from
the economic point of view. The well-being not only depends on objective conditions, but
it is also influenced by the individual’s appreciations about their own quality of life.
The purpose of this study is to analyze the structure of SWB and its determinants for the
Portuguese citizens. A regression analysis will be carried out on individual self-reported
Life Satisfaction and Happiness, used as dimensions of SWB. The empirical analysis is
based on a large survey processed by the European Foundation for the Improvement of
Living and Working Conditions (Eurofound), the third European Quality of Life Survey
(EQLS), which took place from the end of September 2011 to early February 2012 in the
27 European Union Member States.
At the general level, this study contributes to the conceptual definition of SWB pro-
viding new evidence on the composition and determinants of this concept. Life Satisfaction
and Happiness are the two variables used to measure SWB in Portugal. In doing so we
want to clarify whether there is a separate cognitive and affective dimension, the former
associated with Life Satisfaction, the latter with Happiness. This study also contributes to
the empirical literature on the determinants of SWB bringing new evidence for the Por-
tuguese population.
The main contributions of this paper, relative to earlier studies in this subject are the
following:
(1) the estimated SWB functions (through Life Satisfaction and Happiness) include not
only demographic factors, but a large set of control variables like accommodation, em-
ployment status, health, trust in people, number of children, volunteering activity and
sports practicing, among others; (2) the SWB function is estimated by assuming an ordinal
and cardinal specification of the model, implementing the Maximum Likelihood and Or-
dinary Least Squares (OLS) procedures, respectively; (3) Happiness and Life Satisfaction
are two consistent dimensions used to express SWB and are measured and estimated
separately; (4) this study undertakes a micro-level analysis with cross-section data based
on a survey processed by EQLS. Psychologists, sociologists and economists have been
undertaken a macro-level analysis, nevertheless, such country-comparisons suffer from
problems related to social and cultural differences, which may bias the results. Micro-data
empirical analysis does not suffer from this limitation when it is referred to an individual
country.
More specifically, the purpose of this study is to clarify the structure of SWB, by
identifying and checking empirically the similarities and differences between the deter-
minants of Life Satisfaction and Happiness through separate regressions using a repre-
sentative sample of adults in Portugal.
We intend to answer questions of the type: How do the associations of different life
domains with Life Satisfaction and Happiness vary? What are the differences between the
determinants of Life Satisfaction and Happiness? What are the differences and similarities
between the cardinal and ordinal estimation results of the SWB function? Our task is to
provide new understanding about the SWB of the Portuguese’s citizens based on empirical
evidence. We expect that examining the impact of different life domains we can shed light
on life quality feelings and perceptions of the Portuguese population and get a view of pros
and cons of the society on improving well-being in Portugal giving to the policy maker
useful and practical information.
This paper is organized as follows. Section 2 provides a brief review on the importance
of measuring SWB; explains the SWB theories that historically received large attention in
the well-being literature; and discusses the structure of the SWB concept trough different
levels of analysis and methodologies to define this subject. In Sect. 3 we analyze the main
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The Structure of Subjective Well-Being… 1377
determinants which are believed to explain citizeńs well-being and we also present a study
overview and the general hypothesis. The statistical data, the models to estimate and the
methodology used are explained in Sect. 4. The following Sect. 5 presents and discusses
the results obtained from the estimation approach. The last section summarizes the main
findings of the paper and provides some suggestions on policy orientation.
2 Subjective Well-Being and How Do Deal With It
The SWB has gained a growing research attention in social sciences during the last decades
(Diener et al. 1999). In an environment characterized by cultural, social and economic
inequalities, the SWB plays an important role for the societýs development. Diener and
Seligman (2004) argued that nations should create ongoing assessments of well-being to
complement existing economic indicators (e.g., GDP per capita, saving rates, consumer
confidence) and social indicators (e.g., crime rates, longevity, infant mortality rate) used by
leaders to make governmental decisions. They emphasized that monitoring the well-being
at a national level will provide important information beyond economic indicators that
could help to design better policies and improve the quality of life in the populations. One
reason for the interest is the fact that the research on SWB gives a route to people’s
experiences and preferences, which can be utilized in policy decisions (Kahneman and
Krueger 2006).
Following this recognized importance, the research on the causes of SWB has gained
importance in the past years and attracted attention in areas such as economics, sociology
and psychology alike (Easterlin 2003; Frey and Stutzer 2005). Since 1980 the investigation
about the antecedents and correlated factors with SWB has been particularly active (Lucas
et al. 1996) while in Portugal, the research on this topic is still undeveloped (Galinha and
Pais-Ribeiro 2005).
Some studies have been conducted in this cultural context to assess the relationship
between personality traits and SWB (e.g., Albuquerque et al. 2012, 2013), while others
propose to analyze the structure of this complex concept (e.g., Galinha and Pais-Ribeiro
2008, 2011). There are also studies that analyze the impact of macroeconomic factors on
SWB (e.g., Lopes et al. 2014) and test the construct validity of SWB scales (e.g., Silva
et al. 2015). Moreover, none of these studies propose to analyze the impact of a large set of
control variables on SWB in Portugal, and most of them consider only a specific group in
the sample (e.g., teachers, undergraduate students). Therefore, it is necessary to conduct a
more complete study that takes into account a large sample of the Portuguese population
and perform an empirical analysis that characterizes SWB in a more consistent way.
2.1 Theoretical Background on Subjective Well-Being
Subjective Well-Being has been investigated by researchers mostly from the social point of
view having different theoretical orientations (Haller and Hadler 2006). Since the 60’s,
there has been a growing development on the SWB performance, focusing initially on the
so-called ‘‘bottom-up’’ factors (i.e., social and demographic factors, external events,
specific situations) and later emphasizing the ‘‘top-down’’ factors (i.e., personality and
positive predisposition as the main determinants of SWB) (Diener et al. 1999).
More recently, some authors (e.g., Lyubomirsky et al. 2005) argue that SWB is influ-
enced by three main factors: set-point, circumstantial or contextual, and intentional activity
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(Albuquerque et al. 2012). The set-point is genetically determined and is assumed to be

fixed, stable over time, and immune to influence or control. The circumstantial or con-
textual factors of life include social and demographic variables, but also geographic and
environmental determinants. The intentional activity refers to the actions that people en-
gage in their lives (Lyubomirsky et al. 2005). These three factors have historically received
the majority of attention in the well-being literature, constituting a substantial research
base (Lyubomirsky et al. 2005).
One widely accepted view is that SWB fluctuates around a fixed set-point. However,
recent research questions the view that the SWB of individuals is unchanging (Galinha and
Pais-Ribeiro 2008). Consistent with the set-point assumption, Lykken and Tellegen (1996)
indicate substantial long-term stability in Happiness. These authors measured perceived
Happiness on a birth-record-based sample of several thousand middle-aged twins born in
Minnesota and they found that 44–52 % of the variance in Happiness is associated with
genetic variation, and only about 3 % of the variance was explained by contextual factors
(Lykken and Tellegen 1996).
Using a large and nationally representative panel study from Germany, Fujita and
Diener (2005) examined whether there is a set-point for Life Satisfaction. Their results
suggested that Life Satisfaction is influenced by events and that even long-term levels can
be affected by circumstances, which are consistent with the idea of a ‘‘soft set-point’’
(Fujita and Diener 2005). Some other studies suggest that SWB can show significant and
enduring changes not only for given individuals but across entire societies. For instance,
Inglehart et al. (2008) analyzed data from a representative national survey carried out from
1981 to 2007 and they found that Happiness rose in 45 out of 52 countries for which
substantial time-series data were available. They also found that although Life Satisfaction
rose 63 % in these countries, Happiness rose 87 % in the same set of countries. Recently,
Bartels and Boomsma (2009: 613) suggested that although it can be assumed that each
individual has its set-point of SWB (probably genetically determined), influences of en-
vironmental factors unique to each individual are important too.
All the above arguments support the relevance of our proposed empirical analysis to
identify the determinants of SWB. In line with the theoretical developments, we consider a
large set of control variables as contextual (e.g., demographic variables, employment
status), set-point factor (e.g., optimism) and intentional activities (e.g., volunteering ac-
tivity and sports practicing).
2.2 The Structure of Subjective Well-Being: Cognitive and Affective

Dimensions
Subjective Well-Being is defined as the person’s perception on his or her life as a whole.
This concept is materialized in three components: high Life Satisfaction, high presence of
positive moods and emotions, and the absence of negative moods and emotions, all to-
gether often summarized as SWB (Diener et al. 1997; Lucas et al. 1996; Myers and Diener
1995).
There is met consensus among the researchers about the existence of one cognitive
dimension and one affective dimension of SWB—conceptualized as Life Satisfaction and
Happiness status (Sagiv and Schwartz 2000). Experiments have shown that pleasant affect,
unpleasant affect, and Life Satisfaction are separable constructs, but substantially corre-
lated with each other (Diener et al. 1999). While we can broadly distinguish between
affective and cognitive layers of well-being, most of the (empirical) literature seems to be
123
concentrated on the cognitive interpretation of SWB. This is reflected in the notion of SWB
and understood as Life Satisfaction (Frey and Stutzer 2010).
In fact, several authors consider the terms Happiness, Life Satisfaction and SWB to be
synonymous and use them interchangeably. Veenhoven (1991), one of the most influential
authors of Happiness, considers the term Happiness as a synonym of Life Satisfaction.
Following this notion, numerous studies on SWB have used only one measure of SWB,
sometimes representing only one dimension of this concept, cognitive or affective, without
making any distinction between the two (see Bjørnskov et al. 2008; Cummins et al. 2014;
Pereira and Coelho 2013). Moreover, Life Satisfaction is the indicator predominantly used
to express SWB performance (Puntscher et al. 2014). Other researchers use the average of
the responses to perceived Life Satisfaction and Happiness as measure for SWB (e.g.,
Delhey and Dragolov 2014; Lopes et al. 2014; Rözer and Kraaykamp 2013; Ye et al.
2014).
However, some authors have suggested that different measures of SWB are explained
by different determinants, therefore it is important to use several measures of SWB in order
to fully understand the phenomenon (see Gundelach and Kreiner 2004; Haller and Hadler
2006; Inglehart et al. 2008; Stanca 2010).
Gundelach and Kreiner (2004) analyzed perceived Happiness and Life Satisfaction in
nine rich, industrialized countries using data from the European Values Survey (1999). The
results revealed that Happiness and Life Satisfaction are related to each other, but they are
different concepts and that contextual as well as individual factors are important in ex-
plaining their variations. They showed that both concepts are influenced in part by different
determinants and hence cannot necessarily be seen as identical. Haller and Hadler (2006)
also stressed that Happiness and Life Satisfaction are two different concepts of measuring
SWB.
In fact, there is not yet any consensus among researchers about the components of well-
being or what would constitute the gold standard for measuring well-being. Nevertheless,
there is a consensus that the measurement of well-being is important and should be un-
dertaken in major surveys, while recognizing that this is an emerging topic (Diener 2006).
Depending on data availability and the concrete theory of well-being one relies on, SWB is
empirically captured by diverse mental well-being, Happiness or Life Satisfaction mea-
sures (Diener and Seligman 2004; Frey and Stutzer 2010). An impressive literature on
psychology exists that establishes the reliability and validity of such SWB constructs
(Diener et al. 1999).
The data used in our empirical analysis are from the EQLS and both dimensions
Happiness and Life Satisfaction are included in this survey. Being consistent with the
literature review, we assume that the two dimensions are different (i.e., that they cannot be
reduced to the same latent variable despite they are correlated) and we propose to identify
the main determinants of each measure.
2.3 Global and Specific Levels of SWB
Each of the components of SWB can be accessed in several ways and through two main
levels of analysis: the global approach which is a direct evaluation procedure through one-
item measure, and the specific approach which is an indirect evaluation procedure based on
several component levels (Galinha and Pais-Ribeiro 2008). No one has proved to be more
efficient than the other, in fact the utility of SWB measures depends on their own adequacy
in relation to the purposes of the study (Pais-Ribeiro 2004).
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In our study we use the global approach to measure Happiness (a one-item measure
intended to express the affective global dimension of SWB), and Life Satisfaction (a one-
item measure intended to express the cognitive global dimension of SWB).
2.4 Subjective Well-Being and Estimation Methodology
In the literature on this subject, a great debate prevails on whether the variables Life
Satisfaction or Happiness must be investigated assuming an ordinal or cardinal approach,
which are associated with a variety of different models (Ferrer-i-Carbonell and Frijters
2004). Traditionally, the psychologists and sociologists usually interpret Happiness and
Life Satisfaction scores as cardinal, that is, the difference in SWB between four and five for
any individual is the same as between eight and nine for any other individual (Kahneman
et al. 1999). Under the cardinality assumption, simple OLS regressions are appropriate
(Ferrer-i-Carbonell and Frijters 2004).
Nevertheless, economists usually assume only ordinal scores on Happiness and Life
Satisfaction outcomes, i.e., it is unknown what the relative difference between SWB an-
swers is but that all individuals do share the same interpretation of each possible answer
(Clark and Oswald 1996). Relaxing the assumption of cardinality and turning to ordinal
comparability, economists have used the standard Ordinal Logit model to estimate the
Happiness and Life Satisfaction functions (Ferrer-i-Carbonell and Frijters 2004). Addi-
tionally, Ferrer-i-Carbonell and Frijters (2004) conclude that assuming cardinality or in-
terpersonal ordinality of the SWB answers makes little difference to the results (sign and
significance of the explanatory variables are similar).
3 The Main Determinants of Subjective Well-Being
Economic literature recognizes objective indicators and subjective measures as determi-

nants of SWB (Frey and Stutzer 2000). Considering that Life Satisfaction is the variable
predominantly used as a good indicator for explaining SWB performance (Puntscher et al.
2014), in this section we propose a general consideration of the factors having significant
associations with SWB.
3.1 Work and Time Use
Unemployment has one of the largest negative impact on SWB (Clark and Oswald 1994;
Frey and Stutzer 2000; Wolfers 2003). Community involvement and volunteering may
have a positive effect, but this finding is somewhat dubious depending on what is con-
trolled for (Haller and Hadler 2006; Helliwell 2003; Helliwell and Putnam 2004; Meier and
Stutzer 2008; Pichler 2006). There is evidence that physical activity promotes SWB
(Ferrer-i-Carbonell and Gowdy 2007). Finally, socializing with family and friends is as-
sociated with higher SWB scale (Lelkes 2006; Pichler 2006; Veenhoven 1999).
3.2 Material Conditions
The impact of standard of living (related to income and material possessions) on SWB
depends on the confirmation of expectations: positive disconfirmation results in high sat-
isfaction; confirmation of expectations result in some degree of satisfaction; and negative
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disconfirmation result in dissatisfaction (Sirgy 1998). The homeownership and the housing
environment have a significant positive effect on SWB (Diaz-Serrano 2009; Diaz-Serrano
and Stoyanova 2010).
3.3 Attitudes and Beliefs
Trust in other people and trust in key public institutions such as the police and government are
all positive predictors of SWB (Helliwell 2003; Helliwell and Putnam 2004; Hudson 2006).
SWB is also related to major personality traits such as optimism (Ferrer-i-Carbonell 2005).
3.4 Economic and Political Environment
In low-income countries economic factors may have a greater influence on individual

Happiness, but in medium and high-income countries political institutions may be more
relevant (Bjørnskov et al. 2010). Inflation may have a negative influence on SWB as a
factor of economic destabilization and uncertainty (Di Tella et al. 2003). The welfare state
(universal social insurance and social services, such as health care, pensions, and public
education) contributes positively to SWB (Haller and Hadler 2006).
3.5 Personal and Demographic Characteristics
Almost all studies find a U-shaped relationship between age and SWB, with the young and
old being happiest (Blanchflower and Oswald 2008; Ferrer-i-Carbonell and Gowdy 2007).
Where a gender difference is detected, is that women usually report slightly higher Hap-
piness (Alesina et al. 2004). Marriage and stable partnerships are highly and positively
related with SWB (Gerdtham and Johannesson 2001; Myers 2000). Evidence on the effect
of parents having children is rather mixed, depending on the SWB measure, country,
number and age of children (Frey and Stutzer 2000; Haller and Hadler 2006). Good
psychological and physical health both have a strong and positive effect on SWB (Haller
and Hadler 2006; Veenhoven 1996). But, on the other hand, chronic illness affects
negatively SWB (Easterlin 2003). The impact of education varies between studies: in some
it has no significant effect, while in others highest SWB is variously associated with lower,
higher, and intermediate level of education (Clark and Oswald 1994; Oswald 1997).
3.6 Study Overview and Main Hypotheses
The present study proposes to examine the impact of the determinants on two dimensions
of SWB: Happiness and Life Satisfaction. For this purpose we use a representative sample
of the Portuguese citizens to estimate the above dimensions based on multiple regression
models that estimated initially by Ordinary Least Squares and further using an Ordinal
Logistic model specification. Against this background of theories and previous research,
we suggest the following general hypotheses:
H1 Life Satisfaction and Happiness dimensions are explained by different determinants
and they cannot be seen as the same thing despite they are both used to explain SWB.
H2 SWB is a multifaceted concept including a cognitive and an affective dimension—
conceptualized by Life Satisfaction and Happiness, respectively—correlated but separate
dimensions.
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H3 Assuming cardinality or interpersonal ordinality of the SWB answers makes little

difference to the results (sign and significance of the explanatory variables are similar).
4 Data Description and Model Specification
4.1 European Quality of Life Survey (EQLS)
This paper analyses measures of SWB using micro-data from the third EQLS. This survey
took place from September 2011 to February 2012 and the target was the adult population
(aged 18 and over) having the status of private households.
As recommended by the ESS team1 data were weighted using design weights, which
correct for the different inclusion probabilities of individuals, making the samples more
representative. These weights correct the possible bias caused by over or under sampling of
certain types of populations (e.g., women, older people, people living alone, etc.).
To proceed with our study, we provide an empirical analysis using micro-data based on
individuals living in Portugal. The survey displays 1013 observations of Portuguese citi-
zens and the Random Probability Sampling was the sampling method used to collect the
data. In our analysis we ignore the missing and uncompleted observations, and by doing so
we left with 904 observations. This sample is large enough to allow the relevant factors to
be taken into account in a consistent manner.
4.2 Measuring the Dimensions of SWB: Life Satisfaction and Happiness
In this study, SWB is measured by two different dimensions: Life Satisfaction (cognitive
dimension) and Happiness (affective dimension), correlated but different constructs. In the
case of the ESQL survey the questions to determine Life Satisfaction and Happiness, were
of the following nature, respectively:
‘‘All things considered, how satisfied would you say you are with your life these
days? Please tell on a scale of 1 to 10, where 1 means very dissatisfied and 10 means
very satisfied’’ and ‘‘Taking all things together on a scale of 1 to 10, how happy
would you say you are? Here 1 means you are very unhappy and 10 means you are
very happy’’.
Table 1 reports some elementary statistics on these variables showing that, on average,
the Portuguese individuals reported themselves as fairly satisfied and happy with their lives
overall and the dispersion of answers is small.
4.3 Data and Selected Variables
The ESQL survey explores issues pertinent to the lives of European citizens, such as
employment, income, education, housing, family, health, work–life balance, Life Satis-
faction and perceived quality of society.
In this paper, the analysis looks at the relationship between objective indicators and
subjective measures, that is, between reported resources and living conditions on one hand,
and attitudes and preferences on the other. Before the variables selection, we analyzed the
1
http://www.europeansocialsurvey.org/docs/methodology/ESS_weighting_data_1.pdf. Accessed on 8 December
2014.
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Table 1 Descriptive statistics of dependent variables (10-point scale)

Variables Mean Median SDa CVb
All things considered, how satisfied would you say you are with your life 6.71 7 1.914 0.29
these days?
Taking all things together, how happy would you say you are? 7.12 7 1.911 0.27
a
Standard deviation
b
Coefficient of variation
amount of missing data from the sample among participants. Experts have not reached a
consensus regarding the percentage of missing data that becomes problematic. Following
Schafer (1999) suggestion, all variables with missing values higher than 5 % were ex-
cluded from the empirical analysis. For instance, income and satisfaction with quality of
public education service were excluded from the analysis, the former having 75 % and the
latter 9 % of missing values, respectively.
The selection of variables is also based on the ‘‘having, loving and being’’ concepts of
citizen’s behavior, first used by Allardt (1976) in the Scandinavian Welfare Survey to
measure life quality aspects. ‘‘Having’’ is related to the material conditions of human
development and existence; ‘‘Loving’’ expresses the relations with other people deter-
mining social identities; ‘‘Being’’ refers to the people’s necessity of integrating themselves
in the society and living with harmony with nature.
With respect to the ‘‘Having’’ component, we have selected variables expressing per-
sonal trust in public institutions (legal system, police, government and local authorities),
individual satisfaction (education, standard of living, accommodation, health and economic
situation in Portugal), and satisfaction with quality of public health service, chronic illness
and employment status.
The ‘‘Loving’’ component relates to variables with the following aspects: trust in people,
number of children, owns satisfaction with family, social life and marital status.
The ‘‘Being’’ dimension involves variables related to volunteering activity, takes part in
sports, participation in social activities and being optimistic about the future.
Finally, two variables with demographic characteristics are selected in the empirical
analysis, gender and age that traditionally used in this type of models. For description
details of the variables see the Appendix (Tables 6, 7, 8).
As a starting point, we look at the linear correlations between the variables of choice to
explain SWB. This pair-wise correlation indicates the degree and sign of association
between variables not implying any causality effect between them. Table 9 in the Ap-
pendix shows a strong correlation of variables pretending to explain the Life Satisfaction
and Happiness which are statistically significance at the 1 and 5 % levels. Only three of
them present a negative correlation with Life Satisfaction and Happiness: ‘‘Age’’,
‘‘Number of Children’’ and ‘‘Chronic Illness’’. The explanatory variables with the strongest
correlation are ‘‘Satisfaction with Standard of Living’’ and ‘‘Satisfaction with Social Life’’.
4.4 Control Variables and Hypothesized Effects on SWB
Following the literature review about the determinants of SWB and the control variables
included in this study we put forward on Table 2 our hypothesized effects on SWB.
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Table 2 Control variables and

Control variables Hypothesized effects
hypothesized effects on SWB
Male (dummy variable) -
Age -
Chronic illness -
Trust People ?
Trust PublicInst ?
Children No. ?
Sat MatCond ?
Sat Family ?
Sat SocialLife ?
Sat Economic ?
Quality health ?
Volunteering (dummy variable) ?
Employed (dummy variable) ?
Sports (dummy variable) ?
Social activities (dummy variable) ?
Optimistic (dummy variable) ?
Married (dummy variable) ?
All variables are expected to influence positively the SWB except age and chronic
illness for obvious reasons. It is also expected that males have lower SWB than females, as
most empirical studies found in this kind of research.
4.5 Model Specification and Questions to Address
This paper aims at testing the importance of objective indicators and subjective measures
on own well-being and attempts to validate a model able to detect the main determinants of
SWB. Two different model specifications can be used: (1) the model assuming the car-
dinality assumption, and (2) the model assuming the ordinality assumption.
Under the cardinality assumption, the model takes the following form:
X
n
SWBi ¼ a þ bi Xij þ ei ; ei i:i:dð0; r2 Þ
j¼1
where SWB is a cardinal measure of well-being (scale 1–10), X is a set of explanatory

variables, a and b are the parameters to estimate and e is the error term. This model will be
initially estimated by OLS, admitting that the error term ei satisfies the white noise con-
ditions, and is not correlated with any of the explanatory variables (the orthogonality
assumption, cov(Xi, ei) = 0) in order to get unbiased and consistent estimates.
Under the ordinality assumption, the continuous latent variable (SWB*) is defined as:
X
n
SWBi ¼ bi Xij þ ei ¼ Zi þ ei ¼ E SWBi þ ei ; ði ¼ 1; . . .; nÞ
j¼1
where SWB* is the unobserved latent variable, X is the set of regressors, b are the coef-
ficients of independent variable to estimate, and e is the error term which has a logistic
distribution. The ordinal logit model assumes the following specification:
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Pi ¼ E SWBi K jXi ¼ Pi bi Xij þ ei ak ¼ Pi ðei ak bi Xij Þ
Accordingly, the logistic function to estimate is given by

eak bi Xij
Pi ðSWBi K jXi Þ ¼
1 þ eak bi Xij
Following this, it is possible to estimate the response probability of choosing different

levels of well-being based on cut-off points:
aK SWBi \aKþ1 for K ¼ 1 to 10
where K are the ten discrete categories (1–10), and aK are the threshold parameters which
indicate the estimates of cut-off points on SWB to differentiate respondents choosing from
one level of the scale to the next. Assuming the cumulative logistic distribution of ei, this
model will be estimated by the maximum likelihood (ML) method.2 The Ordinal Logit
model estimates all the slop coefficients bi and the cut-off points a’s.
Based on the literature and on the descriptive evidence of the survey, we propose to address
the following questions: (1) Do the variables predicted by economic and social theory to
control SWB behave as expected? (2) Are differences to note between the determinants
explaining Life Satisfaction and those explaining Happiness? (3) Does it make any difference
in the obtained results by assuming an ordinal or cardinal structure of the model?
To answer these questions we estimate two different models, the Life Satisfaction
model and the Happiness model, both being close approximations of explaining SWB of
the Portuguese population.
The two distinct models were first estimated by OLS but we focus more on the Ordinal
Logit specification as the more appropriate one when variables assume discrete values
(scale 1–10).
The ordinal logit model can only be used for data which holds the proportional odds
assumption. On the other hand it is assumed that the slope coefficients are the same across
response categories parallel slope lines. If this assumption does not hold, the ordinal logit
should be replaced by a partial proportional odds ordinal logit model, namely the gener-
alized model (Gujarati and Porter 2009).
It is adequate to test the parallel lines3 hypothesis, which is designed to make a judg-
ment concerning the adequacy of the model. In both models, with Life Satisfaction and
Happiness as dependent variable, this assumption was satisfied (X2LP = 163.849 and
X2LP = 158.730, p value = 0.123 and p value = 0.190), suggesting that the odds for two
pairs of outcome were statistically similar, supporting the use of ordinal logistic regression.
Considering that both Happiness and Life Satisfaction dimensions are relevant to ex-
plain SWB we include both variables in each estimated model as explanatory determinant
in order to avoid omitted variable bias that could emerge as a result of omitting a relevant
factor. In fact Life Satisfaction cannot be omitted from the Happiness equation and vice-
versa, since both are statistically significant.
2
This method maximizes the ML function with respect to the coefficients bi and the thresholds
a1 ; a2 ; . . .; aK1 ; points using an iterative procedure that finds the estimates which guarantee the maximum
probability for the SWBi value to occur (more details can be found in Gujarati and Porter 2009).
h i
3 2 L
The test of parallel lines is given by XLP ¼ 2LLHA ð2LLH0 Þ ¼ 2Ln LHHA Xð2K2Þp . Decision rule
0
2
implies that if XLP [ X 2 (or p value \ 0.05) the null hypothesis (H0 of parallel slops is rejected, i.e., the
regression coefficients are different across all levels of response variables.
123
5 Empirical Results
The sample we use is constituted by 420 males (41.5 %) and 593 females (58.5 %)
Portuguese residents, with age raging between 18 and 99 years, average age 53 years old
and standard deviation 18.667. For descriptive statistic details of the variables used in the
empirical analysis see the Appendix (Tables 7, 8).
5.1 Confirmatory Factor Analysis
The control variables were combined in three different groups. The ‘‘Having’’ group
displays similar variables as the determinants of SWB. It was hypothesized that factor 1
(personally trust in the public institutions) includes the following items: trust in legal
system, police, government and local authorities, and factor 2 (satisfaction with own
material conditions) includes the items: self-satisfaction with education, standard of living,
accommodation and health.
To confirm these hypotheses the Confirmatory Factor Analysis (CFA) was applied and
two dimensions were identified: personally trust in the public institutions and satisfaction
with own material conditions. Varimax rotation was considered appropriate to simplify the
interpretation of the identified factors and to determine the major constructs in the data
(Field 2005).
As it is shown in Table 3, the two factors explain 57 % of the total variance. The result
of Bartlett’s test of sphericity was significant, and the Kaiser–Meyer–Olkin (KMO)
measure of sampling adequacy was 0.726, indicating that the patterns of correlations were
relatively compact and generated distinct and reliable factors (Field 2005). The Cronbach’s
alpha of the two factors ranged from 0.73 to 0.75, respecting the minimum standard for
reliability (0.70) recommended by Nunnally (1978). It can thus be concluded that the items
comprising the two dimensions were internally consistent and stable, and together formed a
reliable scale. Using this factor model, we calculated the factors scores. These two factors
are used in the subsequent regression analysis.
Table 3 CFA results (rotation method: varimax with Kaiser normalization)

Component Eigen Variance
value explained (%)
1 2
Factor 1: Personally trust in the public institutions 2.516 31.451

(Cronbach’s a = 0.751)
Personally trust in the legal system .736 .019
Personally trust in the police .747 .057
Personally trust in the government .753 .032
Personally trust in the local authorities .785 .037
Factor 2: Satisfaction with own material conditions 2.005 25.067
(Cronbach’s a = 0.725)
Satisfaction with your education .022 .678
Satisfaction with your standard of living .162 .807
Satisfaction with your accommodation .068 .760
Satisfaction with your health -.083 .711
2
KMO = 0.726, Bartlett’s test of sphericity: v = 1735.802, df = 28, p \ 0.001
123
5.2 Regression Results
The empirical results of the study are reported in Tables 4 and 5, estimating separately the
two close dimensions of SWB, the Life Satisfaction and Happiness functions, respectively.
Model (1) reports the OLS estimation results and Model (2) the results obtained from the
Ordinal Logit specification using the Maximum Likelihood estimation technique.
Since the problem of heteroskedasticity is common in cross-section regressions, robust
standard errors were used in the estimation approach to get efficient estimates.
The attractions of the ordinal logit are most easily appreciated by considering the
consequences and limitations of analyzing outcomes using OLS (Daykin and Moffatt
2002). The central problem with the OLS is that it assumes that SWBi increases linearly
with explanatory variables (Xi), that is, the marginal effect of Xi remains constant
throughout. In reality, there is no reason for this to happen. The logit model assumes a non-
linear relationship between the dependent and explanatory variables, allowing the marginal
impact to be different along the scale.
Overall, both OLS estimations provide a reasonable goodness of fit explaining SWB,
through Life Satisfaction and Happiness. The control variables explain 45 % of the total
variation in Life Satisfaction (Table 4) and 49.7 % of total variation in Happiness
(Table 5).
The McFadden statistic in the Logit models points to a low degree of explanation of the
control variables, however this statistic has limited interpretation when the dependent
variable is a scale variable (Amemiya 1981). To assess the quality of the estimation results
focus must be given to the joint or individual statistical significance of the estimated
coefficients (Gujarati and Porter 2009).
To test the null hypothesis that all the slope coefficients are simultaneously equal to
zero, we use the F test4 in the OLS regressions and the likelihood ratio (LR)5 in the Ordinal
Logit model. The F and LR statistics show in all cases a very small p value and therefore
the null hypothesis is rejected, concluding the joint significance of the population
parameters.
The individual statistical significance of the population coefficients can be tested by the
t test6 in the OLS regressions and the Wald test7 in the Logit model.
4
The F statistic is given byF stat ¼ ððRSSr RSSur Þ=nÞ=ðRSSur =ðN n 1ÞÞ Fn;Nn1 , where RSSr
and RSSur are the residual sum of squares of the restricted and unrestricted model, respectively. Decision
rule implies that if F stat: [ Fn;Nn1 ð1 aÞ (or p value \ 0.05) the null hypothesis
(H0 : b1 ¼ b2 ¼ ¼ bn ¼ 0Þ is rejected and at least one of the coefficients is different from zero (Gujarati
and Porter 2009).
5
The Likelihood Ratio is given by LR ¼ 2ðLLF ur LLFr Þ Xn2 where LLF ur and LLFr are the log-
likelihood values of the unrestricted and restricted model, respectively, and n the number of restrictions.
Decision rule implies that if LR [ X 2 (or p value \ 0.05) the restricted model is rejected and at least one of
the coefficients is different from zero (Gujarati and Porter 2009).
rffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi

6
The t statistic is given by t stat ¼ bî bi = var bî tNn1 : Decision rule implies that if
jt statj tNn1 ð1 a=2Þ (or p value \ 0.05) the null hypothesis ðH0 : bi ¼ 0Þ is rejected and the pa-
rameter is considered statistically significant at the conventional level (Gujarati and Porter 2009).
2
7
The Wald statistic is given by Wald ¼ b=S:E:^ b X 2 . To test the null hypothesis we compare this
result to a X2 distribution with one degree of freedom. Decision rule implies that when the Wald Chi square
statistic is greater than the critical value of the X2 distribution (or p value \ 0.05), we reject the null
hypothesis (H0:b1 = 0)).
123
Table 4 The determinants of life satisfaction

Model (1) Model (2)
OLS Ordinal logita
Coeff p value (sig.) Coeff p value (sig.)
Male -0.015 0.876 1.0419 0.748

Age 0.014 0.000*** 1.0192 0.000***
Trust in people 0.008 0.712 1.0151 0.589
Trust public institutions 0.143 0.009*** 1.1972 0.007***
Children -0.004 0.902 0.9940 0.888
Satisfaction family -0.005 0.890 0.9980 0.968
Satisfaction material conditions 0.363 0.000*** 1.6803 0.000***
Satisfaction social life 0.078 0.043** 1.1422 0.002***
Satisfaction economic situation 0.027 0.381 1.0284 0.411
Chronic illness 0.027 0.811 1.0284 0.842
Quality health services 0.035 0.202 1.0336 0.312
Volunteering activity 0.438 0.000*** 1.6274 0.002***
Employed status 0.376 0.001*** 1.5558 0.003***
Take part in sports 0.023 0.850 1.0534 0.735
Participation social activities -0.188 0.207 0.8702 0.469
Optimistic about the future 0.228 0.042** 1.3607 0.032**
Married status -0.151 0.152 0.8386 0.201
Happiness 0.475 0.000*** 1.9329 0.000***
Adjusted R2 0.450
McFadden 0.164
F (18,885) 39.368 0.000***
LR X2 586.675 0.000***
X2LP 163.849 0.123
Dependent variable: Life Satisfaction, 10-point scale (904 observations)

*** Significant at the 1 % level; ** Significant at the 5 % level
a
The cut-off points are not presented in the table due to lack of space
From Table 4 the evidence from both models shows that the most relevant variables
explaining ‘‘Life Satisfaction’’ are ‘‘Age’’, ‘‘Trust Public Institutions’’, ‘‘Satisfaction Ma-
terial Conditions’’, ‘‘Satisfaction Social Life’’, ‘‘Volunteering Activity’’, ‘‘Employed Sta-
tus’’, ‘‘Optimistic about the Future’’, and ‘‘Happiness’’.
From Table 5, the most relevant variables explaining ‘‘Happiness’’ of the Portuguese
citizens are ‘‘Age’’, ‘‘Satisfaction Family’’, ‘‘Satisfaction Material Conditions’’, ‘‘Take Part
in Sports’’, ‘‘Optimistic about the Future’’, ‘‘Married’’, and ‘‘Satisfaction with Life’’.
5.3 Determinants of Life Satisfaction
5.3.1 The OLS Approach
Table 4 above, summarizes the results of the estimation of the Life Satisfaction function
applying initially the OLS estimation approach (Model 1). The obtained results will be
123
Table 5 The determinants of happiness

Model (1) Model (2)
OLS Ordinal logita
Coeff p value (sig.) Coeff p value (sig.)
Male -0.080 0.389 0.8624 0.248

Age -0.007 0.041** 0.9881 0.009***
Trust in people -0.026 0.190 0.9608 0.137
Trust public institutions 0.009 0.866 1.0253 0.707
Children -0.012 0.724 1.0111 0.802
Satisfaction family 0.161 0.000*** 1.2177 0.000***
Satisfaction material conditions 0.282 0.001*** 1.5220 0.000***
Satisfaction social life 0.037 0.349 1.1129 0.013**
Satisfaction economic situation 0.008 0.763 0.9861 0.683
Chronic illness -0.154 0.154 0.7741 0.070*
Quality health services 0.008 0.758 1.0481 0.149
Volunteering activity -0.027 0.799 0.8985 0.504
Employed status -0.120 0.267 0.8187 0.184
Take part in sports 0.285 0.011** 1.4120 0.027**
Participation social activities 0.158 0.249 1.2662 0.225
Optimistic about the future 0.183 0.091* 1.4814 0.007***
Married 0.394 0.000*** 1.7807 0.000***
Satisfaction with life 0.431 0.000*** 1.8776 0.000***
Adjusted R2 0.497
McFadden 0.193
F (18,885) 52.455 0.000***
LR X2 674.735 0.000***
X2LP 158.730 0.190
Dependent variable: happiness, 10-point scale (904 observations)

*** Significant at the 1 % level; ** significant at the 5 % level; * significant at the 10 % level
a
The cut-off points are not presented in the table due to lack of space
explained focusing on the interpretation of the marginal impacts of the explanatory factors
used to explain Life Satisfaction in Portugal.
From the OLS estimation approach, ‘‘Happiness’’ and ‘‘Volunteering’’ are the ex-
planatory variables with the greatest impact (in magnitude) on ‘‘Life Satisfaction’’ (0.475
and 0.438, respectively). ‘‘Happiness’’ is measured at a 10-point scale, with 10 representing
very happy and 1 very unhappy. This variable shows a positive and statistically significant
impact on Life Satisfaction (at 1 % level). It is predicted that a one-point improvement in
Happiness, on the 10-point scale, is associated with 0.475 point increase in Life Satis-
faction assuming that everything else remains constant. This result confirms the earlier
findings that Happiness and Life Satisfaction are closely correlated with each other (Haller
and Hadler 2006). ‘‘Volunteering’’ on the other hand is measured by a dummy variable and
has also a positive and statistically significant impact on Life Satisfaction (at 1 % level).
This shows that citizens in Portugal being involved in voluntary actions are getting more
Life Satisfaction than the non-volunteers. Quantifying this relation we would say that Life
123
Satisfaction is 0.438 points (at the 10-point scale) higher for people who participate in
voluntary actions. Therefore helping the others increases people’s individual wellbeing and
this confirms earlier findings. For instance, Meier and Stutzer (2008) using a large panel
data-set for Germany found that people that spend time with volunteer work, reported
higher levels of SWB.
‘‘Employment’’ is another factor showing a relevant positive impact on Life Satisfaction
and it is statistically significant at the 1 % level. Life Satisfaction is 0.376 points (at the
10-point scale) higher for the employed people in Portugal. This is an expected result
revealing that people who are employed are likely to report higher Life Satisfaction than
the unemployed, confirming the empirical literature. In line with this result, Frey and
Stutzer (2000) using data from interviews of more than 6,000 Swiss residents found that
unemployment is associated with a considerable lower level of SWB.
‘‘Satisfaction with Material Conditions’’ is measured at a 10-point scale, with 10 rep-
resenting very satisfied and 1 very dissatisfied and relates the own satisfaction with
education, standard of living, accommodation and health. This explanatory variable reveals
a positive and statistically significant impact on Life Satisfaction (at 1 % level). It is
predicted that a one-point improvement in Satisfaction with Material Conditions, on the
10-point scale, is associated with 0.363 point increase in Life Satisfaction, everything else
remained constant. This result confirms the earlier findings. For instance, Helliwell (2003)
analyses measures of SWB drawn from three successive waves of the World Values
Survey, the 1980–1982, the 1990–1991, and the 1995–1997 periods. The author found that
the health variable is always the most significant of all of the explanatory variables. Also,
Diaz-Serrano (2009) provides empirical evidence for the link between homeownership and
Life Satisfaction using panel data from eight waves of the European Community House-
hold Panel covering the period 1994–2001. Similar results could be found in the literature
linking Life Satisfaction with education and standards of living (Oswald 1997; Sirgy
1998).
Another explanatory variable with a positive and statistically significant impact is the
‘‘Optimistic about the future’’ dummy variable. At a 5 % significance level, it is expected
that optimistic individuals are likely to report greater Life Satisfaction than pessimistic
individuals in Portugal. Quantifying this relation we can infer that Life Satisfaction is
0.228 points (at the 10-point scale) higher for optimistic people than the no-optimistic
ones. This result confirms the earlier findings of Ferrer-i-Carbonell (2005) who used data
from a large German panel known as GSOEP between 1992 and 1997 and found that
optimistic individuals tend to report higher Life Satisfaction scores than pessimistic
individuals.
‘‘Trust in Public Institutions’’ also shows a positive and statistically significant impact
on Life Satisfaction (at 1 % level). This explanatory variable is measured at a 10-point
scale, with 10 representing trust completely and 1 not trust at all, and relates the trust in
legal system, trust in police, trust in government and trust in local authorities. It is pre-
dicted that a one-point improvement in Trust in Public Institutions, on the 10-point scale, is
associated with a 0.143 point increase in Life Satisfaction, everything else assumed con-
stant. This positive correlation is in line with earlier findings. For instance, Hudson (2006)
using panel data from eight waves of the European Community Household Panel covering
the period 1994–2001, provided empirical evidence that trust in public institutions and
institutional performance have a direct and positive impact on Life Satisfaction.
‘‘Age’’ also reveals a positive and statistically significant (at 1 % level) impact on Life
Satisfaction. This explanatory variable is a numerical variable constituted by Portuguese
citizens from age 18 to 99 years old. According to our results it is predicted that each
123
additional year in the ‘‘Age’’ variable is responsible for 0.014 point increase in satisfaction
with life, everything else remained constant.8
Finally, ‘‘Satisfaction with social life’’ is measured at a 10-point scale, with 10 repre-
senting very satisfied and 1 very dissatisfied and has a positive and statistically significant
(at 5 % level) impact on Life Satisfaction. It is predicted that a one-point improvement in
Satisfaction with Social Life, on the 10-point scale, is associated with a 0.078 point
increase in Life Satisfaction, everything else remained unchanged. This result is in line
with earlier findings by Pichler (2006) that he used data from the European Social Survey
(2003) and found that social contacts contribute substantially to high quality of life among
the young and the older population.
Notably, the OLS regression failed to assign any statistical significance to the other
explanatory variables used, like ‘‘Gender’’, ‘‘Trust in people’’, ‘‘Number of children’’,
‘‘Satisfaction with family’’, ‘‘Satisfaction with economic situation’’, ‘‘Chronic illness’’,
‘‘Quality of health services’’, ‘‘Take part in sports’’, ‘‘Participation in social activities’’, and
‘‘Marital status’’.
5.3.2 The Ordinal Logit Model
Table 4 reports also the results obtained from the estimation of the Ordinal Logit model
(Model 2). The main advantage of this probabilistic model is that assumes a non-linear
relation between the odds-ratio of the dependent variable and the explanatory variables
used in the model. Therefore, the impact of the explanatory factors is not constant over the
10-point scale as it is assumed in the OLS regression, but differs along the points of the
scale.
According to the obtained outcome, the general view is that the results are very similar
with the OLS regression in terms of the sign impact and statistical significance of the
regressors used in the estimation approach. Only the variable ‘‘Satisfaction with social
life’’ has increased its significance from 5 to 1 % level. However, the values of the
estimated coefficients are not comparable with the OLS regression since in the logit model
coefficients have a different interpretation indicating the expected change in the ordinal
log-odds scale (in probabilistic terms) of the well-being variable.
As in the OLS regression the variables ‘‘Happiness’’ and ‘‘Volunteering’’ have a strong
positive impact on ‘‘Life Satisfaction’’ which are interpreted as follows: any one-point
improvement in ‘‘Happiness’’, on the 10-point scale, the odds-ratio in favor of higher
category over a lower category of ‘‘Life Satisfaction’’ increases by 93.29 %, everything
else remained constant. With respect to ‘‘Volunteering’’, the odds-ratio in favor of higher
category over a lower category of ‘‘Life Satisfaction’’ increases by 62.74 % when indi-
viduals start practicing volunteer activities. Accordingly, happier people and people par-
ticipating in volunteering activities are more likely to assign higher ratings of Life
Satisfaction than unhappier people or non-volunteers.
The interpretation of the effects of the other explanatory variables is similar. Accord-
ingly, the respective increase in probability of passing from a lower to a higher scale in
‘‘Life Satisfaction’’ is 1.92 % for ‘‘Age’’, 19.72 % for ‘‘Trusting in Public Institutions’’,
68.03 % for ‘‘Satisfaction with material conditions’’, 14.22 % for ‘‘Satisfaction with social
life’’, 55.58 % for ‘‘Employed’’ individuals, and 36.07 % for ‘‘Optimistic’’ individuals.
8
We have also tested the convexity hypothesis of the impact of age by introducing the square of age
variable in Life Satisfaction and Happiness equations. The regression results do not confirm the existence of
a threshold point where Life Satisfaction and Happiness decrease when a cut-off point in age is reached.
123
5.4 Determinants of Happiness
5.4.1 The OLS Approach
Table 5 summarizes the results of the estimation of the ‘‘Happiness’’ function applying
initially the OLS estimation approach (Model 1). We will focus on the interpretation of the
marginal effects of the explanatory factors used to explain ‘‘Happiness’’ in Portugal.
As can be seen ‘‘Life Satisfaction’’ and ‘‘Married’’ are the explanatory variables with
the greatest impact (in magnitude) on ‘‘Happiness’’. ‘‘Life Satisfaction’’ is measured at a
10-point scale with 10 representing very satisfied and 1 very dissatisfied. This variable has
a positive and statistically significant impact on ‘‘Happiness’’ (at 1 % level). It is predicted
that a one-point improvement in satisfaction with life, at the 10-point scale, is associated
with a 0.431 point increase in Happiness, everything else remained constant. This result
reinforces the earlier findings that Happiness and Life Satisfaction are closely correlated
with each other (Haller and Hadler 2006). ‘‘Married’’ is measured by a dummy variable
and shows also a positive and statistically significant impact on ‘‘Happiness’’ (at 1 %
level). This reveals that being married or living together are causes of higher Happiness in
Portugal confirming earlier findings in the literature. For instance, Helliwell and Putnam
(2004) using large samples of data from the World Values Survey, the US Benchmark
Survey and a comparable Canadian survey, found that being married increases Happiness.
‘‘Satisfaction with material conditions’’ influences positively ‘‘Happiness’’ and it is
statistically significant at the 1 % level. We can infer that a one-point improvement in
satisfaction with material conditions, on the 10-point scale, is associated with a 0.282 point
increase in Happiness, everything else remained constant. Another variable with positive
and statistically significant impact on ‘‘Happiness’’ is ‘‘Satisfaction with Family’’. This
variable is measured on a 10-point scale, with 10 representing very satisfied and 1 very
dissatisfied. It is predicted that a one-point improvement in Satisfaction with Family, on the
10-point scale, is associated with a 0.161 point increase in Happiness, everything else
remained unchanged. This is in line with earlier findings by Helliwell and Putnam (2004)
showing that having a family fosters personal well-being, and spending more time with the
family increases Happiness.
Another explanatory variable with statistical significance (at 5 % level) is ‘‘Take part in
Sports’’, which is a dummy variable. The impact of this variable shows that people who
engage in physical activities are happier than people that do not practice sports increasing
the 10-point scale of ‘‘Happiness’’ by 0.285 units. A similar result was found by Rasciute
and Downward (2010) using data from a survey conducted by the British Market Research
Bureau in 2005. In this study, physical activity through participation in any type of sports
has a statistically significant and positive effect on Happiness. This evidence reinforces the
benefits obtained by regular physical activity (unstructured activities incorporated in daily
life) and participation in exercise (structured, planned and repetitive activities).
A positive impact on ‘‘Happiness’’ is also found with respect to the ‘‘Optimistic about
the Future’’ variable, but it is relevant only at 10 % significance level. It is therefore
confirmed that optimistic individuals are likely to report greater Happiness than pessimistic
individuals, increasing the 10-point scale of ‘‘Happiness’’ by 0.183 units.
‘‘Age’’ is the only explanatory variable with a negative significant impact on ‘‘Happi-
ness’’ (at 5 % level). Its impact reveals that each additional year in ‘‘Age’’ is responsible
for 0.007 point decrease in ‘‘Happiness’’, everything else being unchanged.
123
Notably, the regression failed to assign any statistical significance to the other ex-
planatory variables, such as ‘‘Gender’’, ‘‘Trust in people and public institutions’’, ‘‘Number
of Children’’, ‘‘Satisfaction with social life’’, ‘‘Satisfaction with economic situation’’,
‘‘Chronic illness’’, ‘‘Quality of health services’’, ‘‘Volunteering’’, ‘‘Employed status’’ and
‘‘Participation in social activities’’.
5.4.2 The Ordinal Logit Model
This alternative model as explained before allows for a non-linear relationship between the
dependent variable (the odds-ratio) and the explanatory factors included in the regression.
In this way the impact of the regressors is not constant over the 10-point scale used in this
study but varies over the scale. The marginal effects of regressors measure the increase in
probability of passing from a lower to a higher point of the scale (the odds-ratio) in which
the dependent variable is measured.
Table 5 reports the results obtained from the estimation of the Ordinal Logit model
(Model 2). In terms of the statistical significance of covariates there is an improvement
since two more explanatory variables show to be relevant, the ‘‘Satisfaction Social Life’’
and ‘‘Chronic Illness’’ at 1 and 10 % significance level, respectively. In comparison to the
OLS regression results, ‘‘Age’’ and ‘‘Optimistic about the future’’ are now statistically
significant at the 1 % level. The statistical significance of the remaining explanatory
variables remains the same.
It can be seen from the reported results that the probability of being happy decreases
with age. The regression result suggests that for each additional year in the ‘‘Age’’, the
odds-ratio in favor of higher Happiness category over a lower category of Happiness
decrease by 1.19 %, everything else remained constant. Another expected negative impact
on Happiness is due to ‘‘Chronic Illness’’. Our evidence shows that the odds-ratio in favor
of higher Happiness category over a lower category of Happiness decreases by 22.59 % for
individuals that suffer from chronic illness.
As expected, the variables ‘‘Satisfaction with family’’, ‘‘Satisfaction with material
conditions’’, and ‘‘Satisfaction with social life’’ positively affect ‘‘Happiness’’. In more
concrete terms our findings suggest that a one-point increase in each of these variables (on
the 10-point scale), the odds-ratio in favor of higher over a lower category of Happiness
increases by 21.77, 52.2 and 11.29 % respectively, everything else remained constant.
Therefore, Portuguese people who are satisfied with family, with material conditions and
with social life are more likely to be happier.
Our evidence also shows that individuals that are engaged in physical activities (take
part in Sports) and are optimistic (Optimistic about the future) they have higher probability
to be happier. More precisely, the odds-ratio in favor of higher over a lower category of
Happiness increases by 41.2 % when individuals are practicing physical activities and
increases by 48.14 % when individuals are optimistic about the future. Married individuals
are also happier. The odds-ratio in favor of higher over a lower category of Happiness
increases by 78.07 % when individuals are married.
Finally, ‘‘Life Satisfaction’’ is a strong contributor to ‘‘Happiness’’. Our evidence shows
that a one-point improvement in this variable, on the 10-point scale, the odds-ratio in favor
of higher over a lower category of Happiness increases by 87.76 %, everything else
remained constant. Accordingly, people being more satisfied with life as a whole have
higher probability of feeling happier.
123
6 Concluding Remarks
The aim of this study is to analyze the main determinants of SWB in Portugal through two
different constructs, Life Satisfaction and Happiness. The Life Satisfaction and Happiness
functions are estimated by OLS and the Ordinal Logit model is used as an alternative
approach to compensate the limitations of the former. Data are taken from the third EQLS
to run the regressions.
Our study contributes to the empirical literature dealing with the determinants of the
SWB by considering a special case of the Portuguese population. We use micro-data to
measure SWB by means of self-reported answers to a Life Satisfaction and Happiness
status. We estimate two separate functions, Life Satisfaction and Happiness to identify the
main determinants that could explain the well-being status of the Portuguese population.
We employ two alternative approaches the OLS and Ordinal Logit to check the robustness
of our results.
Our empirical analysis shows that there are no substantial differences between the OLS
and the Ordinal Logit approaches, both identifying the same factors explaining the Life
Satisfaction and Happiness status of the Portuguese population. However, the meaning and
interpretation of the marginal effects of covariates are different in the two approaches.
More precisely, our empirical analysis provides evidence that ‘‘Age’’, ‘‘Trust in Public
Institutions’’, ‘‘Satisfaction with material conditions’’, ‘‘Volunteering’’, ‘‘Employment
status’’, ‘‘Happiness’’, ‘‘Satisfaction with social life’’ and ‘‘Optimistic about the future’’ are
the main determinants in explaining the ‘‘Live Satisfaction’’ status of the Portuguese
population. All these factors have a positive and statistically significant impact on ‘‘Live
Satisfaction’’ improving the well-being of the Portuguese population.
We also obtained evidence that ‘‘Satisfaction with family’’, ‘‘Satisfaction with material
conditions’’, ‘‘Marital Status’’, ‘‘Life Satisfaction’’, ‘‘Age’’, ‘‘Sports practicing’’ and
‘‘Optimistic about the future’’ are all relevant factors in explaining the Happiness status of
the Portuguese population. All the explanatory factors have a positive impact on ‘‘Hap-
piness’’ except ‘‘Age’’. Interestingly, the Ordinal Logit approach identifies two more
relevant factors that explain ‘‘Happiness in Portugal’’, ‘‘Chronic Illness’’ with a negative
impact and ‘‘Satisfaction Social Life’’ with a positive effect on ‘‘Happiness’’.
Our results offer some implications for policy orientation. Economic policies have to be
implemented aiming at improving the standards of living and the practice of exercise in
general by innovative programs and incentives. At the same time, it would be important to
discuss the new reality of societies, where the individuals work increasingly hours and
have less time and availability to family, to social life and volunteer work. This style of life
has a negative impact on Happiness and Life Satisfaction reducing people’s well-being and
could affect not only social aspects of life but also economic aspects linked to labor
productivity performances.
Acknowledgments We are grateful to two anonymous referees for their useful comments and suggestions.
We acknowledge the free access of data provided by the European Quality of Life Survey. UK Data Services
at University of Essex, Colchester is the data archive. The European Foundation for the Improvement of
Living and Working Conditions is simultaneously the depositor, the principal investigator and the sponsor
(http://dx.doi.org/10.5255/UKDA-SN-7316-1).
Appendix
See Tables 6, 7, 8 and 9.
123
Table 6 Description of the variables

Name Question Measure
Gender Gender of the respondent 1 = ‘‘Male’’

0 = ‘‘Female’’
Age What was your age last birthday? [18–99]
Trust_Peoplea Would you say that most people can be trusted? Scale [1–10]
Trust_LegalSystemb How much you personally trust in the legal system? Scale [1–10]
Trust_Policeb How much you personally trust in the police? Scale [1–10]
Trust_Governmentb How much you personally trust in the government? Scale [1–10]
Trust_Authoritiesb How much you personally trust in the local authorities? Scale [1–10]
Children_No. How many children of your own do you have? Numeric
Sat_Educationc How satisfied are you with your education? Scale [1–10]
Sat_SLivingc How satisfied are you with your present standard of living? Scale [1–10]
Sat_Accommodc How satisfied are you with your accommodation? Scale [1–10]
Sat_Familyc How satisfied are you with your family life? Scale [1–10]
Sat_Healthc How satisfied are you with your health? Scale [1–10]
Sat_SocialLifec How satisfied are you with your social life? Scale [1–10]
Sat_Economicc How satisfied are you with economic situation in Portugal? Scale [1–10]
Chronic_Illness Do you have any chronic (long-standing) physical or mental 1 = Yes; 0 = No
health problem, illness or disability?
Quality_Healthd How would you rate the quality of the public health services? Scale [1– 10]
Volunteering Unpaid voluntary work in the last 12 months? 1 = Yes; 0 = No
Employed_Status Are you employed or unemployed? 1 = Employed
0 = Unemployed
Sports Take part in sports or physical exercise? 1 = Yes; 0 = No
Social_Activities Participate in social activities of a club, society, or an 1 = Yes; 0 = No
association?
Optimistic Are you optimistic about the future? 1 = Yes; 0 = No
Married Could I ask you about your current marital status? 1 = Yes; 0 = No
a
1 Means you can’t be too careful and 10 means to most people can be trusted
b
1 Means do not trust at all and 10 means trust completely
c
1 Means very dissatisfied and 10 means very satisfied
d
1 Means very poor quality and 10 means very high quality
Table 7 Descriptive statistics of the selected variables

N Mean SD Minimum Maximum
Valid Missing
Age 1013 0 53.07 18.667 18 94

Trust_People 1009 4 4.20 2.447 1 10
Trust_LegalSystem 974 39 3.54 2.085 1 10
Trust_Police 1004 9 5.59 2.264 1 10
Trust_Government 988 25 3.25 2.163 1 10
Trust_Authorities 992 21 5.00 2.295 1 10
Children_No. 1012 1 1.69 1.539 0 10
Sat_Education 1007 6 7.54 2.063 1 10
123
Table 7 continued
N Mean SD Minimum Maximum
Valid Missing
Sat_SLiving 1012 1 6.48 2.139 1 10

Sat_Acommodation 1013 0 7.39 1.963 1 10
Sat_Family 1011 2 7.83 1.968 1 10
Sat_Health 1013 0 6.72 2.405 1 10
Sat_SocialLife 1009 4 7.03 1.933 1 10
Sat_Economic 997 16 2.87 1.944 1 10
Quality_Health 1005 8 5.52 2.012 1 10
Table 8 Descriptive statistics of

Frequency Percent
the selected variables (dummies)
Gender
Male 420 41.5
Female 593 58.5
Total 1013 100
Chronic_Illness
Yes 343 34.1
No 663 65.9
Total 1006 100
Volunteering
Yes 258 25.5
No 755 74.5
Total 1013 100
Employed_Status
Employed 394 38.9
Unemployed and other 619 61.1
Total 1013 100
Sports
Yes 275 27.2
No 735 72.8
Total 1010 100
Social_Activities
Yes 150 4.9
No 858 85.1
Total 1008 100
Optimistic
Yes 282 28.0
No 724 72.0
Total 1006 100
Married
Yes 640 63.2
No 372 36.8
Total 1012 100
123
Table 9 Correlations between explanatory variables and SWB (life satisfaction and happiness)
Explanatory variables Life satisfaction Happiness
Correlation p value (sig) Correlation p value (sig)
Age -0.104 0.001*** -0.215 0.000***

Trust_People 0.107 0.001*** 0.045 0.154
Trust_LegalSystem 0.102 0.001*** 0.039 0.227
Trust_Police 0.118 0.000*** 0.073 0.020**
Trust_Government 0.123 0.000*** 0.064 0.043**
Trust_Authorities 0.149 0.000*** 0.099 0.002***
Children_No. -0.058 0.066* -0.074 0.019**
Sat_Education 0.192 0.000*** 0.269 0.000***
Sat_SLiving 0.580 0.000*** 0.498 0.000***
Sat_Acommodation 0.335 0.000*** 0.370 0.000***
Sat_Family 0.351 0.000*** 0.478 0.000***
Sat_Health 0.333 0.000*** 0.454 0.000***
Sat_SocialLife 0.409 0.000*** 0.446 0.000***
Sat_Economic 0.128 0.000*** 0.057 0.074*
Quality_Health 0.194 0.000*** 0.139 0.000***
Gender 0.057 0.069* 0.062 0.047**
Chronic_Illness -0.182 0.000*** -0.220 0.000***
Volunteering 0.113 0.000*** 0.065 0.040**
Employed_Status 0.179 0.000*** 0.179 0.000***
Sports 0.168 0.000*** 0.225 0.000***
Social_Activities 0.093 0.003*** 0.127 0.000***
Optimistic 0.237 0.000*** 0.219 0.000***
Married 0.066 0.035** 0.187 0.000***
*** Significant at 1 % level; ** Significant at 5 % level; * Significant at 10 % level
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Soc Indic Res (2016) 126:1375–1399

The Structure of Subjective Well-Being and Its

Elias Soukiazis1 • Sara Ramos1

Accepted: 8 March 2015 / Published online: 13 March 2015

Keywords Factor analysis Happiness Life satisfaction Ordinal logit models

& Elias Soukiazis

2 Subjective Well-Being and How Do Deal With It

2.1 Theoretical Background on Subjective Well-Being

(Albuquerque et al. 2012). The set-point is genetically determined and is assumed to be

2.2 The Structure of Subjective Well-Being: Cognitive and Affective

2.3 Global and Specific Levels of SWB

2.4 Subjective Well-Being and Estimation Methodology

3 The Main Determinants of Subjective Well-Being

Economic literature recognizes objective indicators and subjective measures as determi-

3.1 Work and Time Use

3.2 Material Conditions

3.3 Attitudes and Beliefs

3.4 Economic and Political Environment

In low-income countries economic factors may have a greater influence on individual

3.5 Personal and Demographic Characteristics

3.6 Study Overview and Main Hypotheses

H3 Assuming cardinality or interpersonal ordinality of the SWB answers makes little

4 Data Description and Model Specification

4.1 European Quality of Life Survey (EQLS)

4.2 Measuring the Dimensions of SWB: Life Satisfaction and Happiness

4.3 Data and Selected Variables

Table 1 Descriptive statistics of dependent variables (10-point scale)

4.4 Control Variables and Hypothesized Effects on SWB

Table 2 Control variables and

4.5 Model Specification and Questions to Address

where SWB is a cardinal measure of well-being (scale 1–10), X is a set of explanatory

Accordingly, the logistic function to estimate is given by

Following this, it is possible to estimate the response probability of choosing different

5.1 Confirmatory Factor Analysis

Table 3 CFA results (rotation method: varimax with Kaiser normalization)

Factor 1: Personally trust in the public institutions 2.516 31.451

5.2 Regression Results

Table 4 The determinants of life satisfaction

Coeff p value (sig.) Coeff p value (sig.)

Male -0.015 0.876 1.0419 0.748

Dependent variable: Life Satisfaction, 10-point scale (904 observations)

5.3 Determinants of Life Satisfaction

5.3.1 The OLS Approach

Table 5 The determinants of happiness

Coeff p value (sig.) Coeff p value (sig.)

Male -0.080 0.389 0.8624 0.248

Dependent variable: happiness, 10-point scale (904 observations)

5.3.2 The Ordinal Logit Model

5.4 Determinants of Happiness

5.4.1 The OLS Approach

5.4.2 The Ordinal Logit Model

See Tables 6, 7, 8 and 9.

Table 6 Description of the variables

Gender Gender of the respondent 1 = ‘‘Male’’

Table 7 Descriptive statistics of the selected variables

Age 1013 0 53.07 18.667 18 94

N Mean SD Minimum Maximum

Sat_SLiving 1012 1 6.48 2.139 1 10

Table 8 Descriptive statistics of

Correlation p value (sig) Correlation p value (sig)

Age -0.104 0.001*** -0.215 0.000***

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Age -0.104 0.001* -0.215 0.000*