ECONOMIC RECORD, VOL. 99, NO.

S1, DECEMBER, 2023, 50–66

Does Unsatisfactory Subjective Well-Being of School

Children Decrease their Cognitive Skill Development?*
NADEZHDA V. BARYSHNIKOVA, FLORIAN PLOECKL and
NASANTOGTOKH YUNREN
School of Economics and Public Policy, University of Adelaide, Adelaide, SA, Australia

This study examines the heterogeneous effect of subjective well-

being on the cognitive development of school-age children in
developing countries based on the Young Lives Longitudinal Survey.
A fixed-effects specification, an instrumental variable approach with
parental subjective well-being as the instrument, and quantile IV
estimations show that low subjective well-being leads to a 2–
3 month developmental delay. The effect is heterogeneous across
the cognitive development distribution, appearing stronger for the
lower part of the distribution and weakening at the top end.
Additionally, the precise shape of this gradient differs between
genders, locations, and school types.

I Introduction well-being of the child, and therefore this study

The cognitive development of children has long
been the attention of research in different
academic literatures, including psychology and
economics. The focus has been normally on the
impact of external and environmental factors,
ranging widely from factors such as nutrition, the
labour force participation of the mother or the
intensity of the interactions with the father
(Grantham-McGregor et al., 2007; Bernal, 2008;
Schady, 2011). This external focus leaves open
the role of internal factors such as subjective
*The authors declare no conflict of interest. Data is
available from the UK Data Archive. We thank
anonymous referees and the attendees of the 2022
Australian Conference of Economists in Hobart for
their valuable feedback on earlier versions of this
paper. We would also like to extend our gratitude to the
Young Lives foundation for granting us permission to
use their data. Open access publishing facilitated by
The University of Adelaide, as part of the Wiley - The
University of Adelaide agreement via the Council of
Australian University Librarians.
JEL classifications: J82, I21, I38
Correspondence: Nasantogtokh Yunren, School of
Economics and Public Policy, University of Adelaide,
10 Pulteney St, Adelaide, SA, 5000, Australia. Email:
nasantogtokh.yunren@adelaide.edu.au
50
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Economic Society of Australia.
This is an open access article under the terms of the Creative Commons Attribution License, which permits use,
distribution and reproduction in any medium, provided the original work is properly cited.
doi: 10.1111/1475-4932.12773
explores whether subjective well-being has a
noticeable impact on the cognitive development
of children or whether these characteristics are
substantially unrelated.
Traumatic events, such as school shootings, can
have a substantial impact on the mental well-
being of young students (North et al., 2013; Lowe
& Galea, 2017; Bharadwaj et al., 2021), as may
have more prolonged environmental factors, such
as the ramifications of the COVID pandemic or
anxiety about climate change (de Miranda
et al., 2020; Crandon et al., 2022), yet the actual
living circumstances of these children may not
have seen any noticeable change. However,
psychology has established that subjective well-
being is not just shaped by those environmental
effects but can also be affected by targeted
interventions, predominantly by therapeutic or
behavioural means (Diener et al., 1999; Diener &
Ryan, 2009), which has also spawned a large,
popular self-help literature. This raises the
question of whether these interventions targeted
at subjective well-being can also have an impact
on cognitive development.
With the successful development and applica-
tion of psychometric testing, such as the Peabody
Picture Vocabulary Test (PPVT), the cognitive

2023 WELL- BEING AND COGNITIVE SKILLS
development of children has been the subject of
study over a few decades,1 while subjective well-
being has come into focus only more recently
(Diener et al., 1999; Diener & Ryan, 2009). An
important aspect is the relative paucity of
subjective well-being measures, though the con-
sistency and correlation between certain subjec-
tive measures, such as scores based on Cantril’s
ladder, with external objective measures have
now been established (Diener & Ryan, 2009).
This opens up the possibility to explore the link
between subjective well-being and cognitive
development.
The cognitive development of children is not a
uniform linear process but has stages for different
development areas (Grantham-McGregor
et al., 2007). Relatively more attention has been
paid to early childhood until 5–6 years of age due
to the various aspects of the development process;
however, we focus on school-age children to
establish whether an impact of subjective well-
being, and potential interventions in that age
range, is possible. Similarly, we only look at
children in a developing country environment
where the cognitive development of a substantial
extent of children is lagging that of their
developed world counterparts (Grantham-
McGregor et al., 2007).
Practically this leads to the use of the Peru
component of the Young Lives Longitudinal
Study (YLLS), a longitudinal study of poverty
and inequality in the lives of children in several
developing countries. It provides a country-wide
representative panel dataset for school-age chil-
dren and includes survey measures for the
subjective well-being of children, based on
Cantril’s ladder as well as test results for the
Spanish-language version of the PPVT as a
measure for cognitive skill development.
The relationship between subjective well-being
and cognitive development is not obviously clear
and causal. Bernal (2008) shortly surveys meth-
odological approaches for the effect of maternal
labour force participation and cognitive develop-
ment and highlights fixed effects, instrumental
variables (IVs) and dynamic modelling estima-
tions. Here we follow the first two, but dynamic
modelling is not suitable as it involves internal
neurological and biological processes rather than
external economic decision-making (Nelson
1 onstrate a significant negative impact of low SWB
The test has been extensively used since the 1960s
(Dunn & Dunn, 1965).
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51
et al., 2014). However, we do explore the
structure and nature of the relationship in more
detail through a quantile regression (QR)
approach, including an application to relevant
subsets based on child or environment
characteristics.
This approach illuminates multiple important
aspects and contributes to our understanding of
the relationship between subjective well-being
and cognitive development in a number of ways.
First, we provide support that the subjective well-
being of school-age children does have a direct
impact on the development of their cognitive
skills. This highlights that the impact of subjec-
tive well-being is not fully captured by objective
well-being criteria, but is shaped by subjective
perceptions as well. The fixed-effects specifica-
tions illuminate the relative importance of time-
invariant influence factors, while the IV estima-
tion addresses the potential endogeneity present.
The strength and limitations of these estimations
are discussed.
Second, our study more deeply explores the
nature and structure of the heterogeneity of the
relationship between subjective well-being and
cognitive development. We estimate panel QR
models, including a panel generalised QR model
with an IV framework (IV-QRFE) by Pow-
ell (2016), which examine whether the effect of
subjective well-being varies along the cognitive
development distribution. This potential hetero-
geneity is also explored within particular sub-
samples. First, we explore whether heterogeneity
differs across gender by estimating the effects
separately for boys and girls; then second, we
investigate a potential difference due to the
nature of the wider environment by separate
estimation for urban and rural children; and third,
we look at different school environments by
separating public and private school children.
The estimation results for OLS and fixed effects
show a statistically significant negative effect, with
low subjective well-being associated with a cogni-
tive development lag of 2–3 months. The use of
parental well-being as an IV leads to diverging
results, and the standard at-mean specification
becomes statistically insignificant, while a median
QR shows a statistically significant negative effect
close to that of the QR without IV and the standard
fixed effects specification.
The quantile results for the effect along the
whole cognitive development distribution dem-
throughout, though the magnitude of the effect is

52 ECONOMIC RECORD
stronger in the lower half and weakens notably at
the top 90th percentile. This indicates that
children at the upper end of the cognitive
development distribution seemingly are less
strongly influenced in their development by a
low perception of their own well-being, while
students further down the distribution apparently
experience a stronger delay in their development.
In general, a similar pattern is visible in the
investigated sub-samples as well, though the
strength of the gradient and especially the effect
at the top end differ somewhat. This is most
notable at the top end of the distribution where
girls and rural students retain substantially
negative effects and boys and urban students
actually experience a positive impact.
The remainder of the paper is structured as
follows. The Section II introduces the general
concepts of subjective well-being and cognitive
development, as well as related metrics. Data
from the YLLS study, as well as descriptions of
our outcome variables and covariates, are pre-
sented in Section III. Following this, the empir-
ical estimation methodologies utilised in our
investigation are outlined in Section IV, and the
empirical findings are presented in Section V. The
paper concludes in Section VI.
II Background
(i) Well-Being
The concept of well-being has attracted more
attention in recent years (Singh et al., 2019),
including the development of a better under-
standing of its complexity and the move towards a
more general definition rather than a variety of
related ones, despite disputes and uncertainty
about direct measurement (Camfield et al., 2009).
According to Bradshaw and Richardson (2009),
well-being is the realisation of children’s rights
and the achievement of their potential in the light
of their abilities and skills. White (2007) presents
a useful framework that encompasses a variety of
well-being concepts, distinguishing between hav-
ing and living a good life and locating one’s life
in the world. In this context, having a good life
refers to material welfare and living standards,
while living a good life infers values and ideals.
In addition to these, locating one’s life is highly
related to experience and subjectivity. More
specifically, Gasper (2007) explains having a
good life is externally assessed and approved, as
well as normatively approved, non-feeling
aspects of a person’s life. In terms of living a
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DECEMBER
good life, it is described by Bradshaw and
Richardson (2009) as participating actively in
creating well-being through balancing different
factors, developing and utilising resources and
responding effectively to stress. Moreover, locat-
ing one’s life is defined by Gough and McGre-
gor (2007) complementary to thoughts about the
characteristics of human happiness and the type
of life to be led. Therefore, the general under-
standing and concepts related to well-being in
this paper are summarised as having a good life,
living a good life and locating one’s own life.
When well-being in relation to children is
broadly discussed, a number of factors that may
contribute to the way in which children’s well-
being is defined are identified, such as their
nationality, gender, age, ethnicity, class and birth
order Camfield et al. (2009). Cunha and Heck-
man (2007) explain child-related well-being in
their human capital paradigm by considering the
current well-being of children in comparison to
their future potential, while Frønes (2007) states
that children are more concerned with well-
becoming over well-being. For instance, they
focus on long-term goals such as education.
Moreover, Hood (2007) simplified measures of
child well-being associated with play and leisure.
Considering all the factors mentioned earlier,
there are many child-focused well-being mea-
sures and indices. For example, Australia devel-
oped the Personal Well-being index for pre-
school-age children, school-age children, adoles-
cents and adults. This index has seven domains:
standard of living, health, life achievement,
personal relationships, personal safety,
community-connectedness and future security.
Another global child-focused well-being index
is UNICEF’s National Index of Quality of Life.
This index reflected ‘subjective well-being’ as a
separate domain designed to capture the well-
being of children Ansell et al. (2007). According
to Lindert et al. (2015), subjective well-being is
the feeling of contentment, satisfaction or happi-
ness that arises from optimal functioning in
cognitive terms. It is important to note that
optimal functioning is both a relative and not an
absolute concept because the benchmark for
judging lies in an individual’s perception of their
own goals.
The Cantril Self-Anchoring Scale was intro-
duced by Cantril (1965) and is based on a ladder
that expresses one’s perception of life satisfac-
tion. This ladder consists of nine steps in which
step 9 represents the most satisfied state, whereas
Economic Society of Australia.

2023 WELL- BEING AND COGNITIVE SKILLS
the bottom step 1 represents the lowest level of
life satisfaction. Given our focus on subjective
well-being, this measure will be used in this
study. The Cantril scale is a subjective measure;
however, research in psychology has indicated
the validity and consistency of such measures
between them and with objective well-being
approaches (Diener et al., 1999; Diener &
Ryan, 2009). In addition, the notion that subjec-
tive well-being cannot be systematically affected
or manipulated through direct interventions has
been refuted, with a number of psychological and
therapeutic interventions developed and posi-
tively evaluated for their impact (Diener &
Ryan, 2009).
(ii) Cognitive Development
While the formalisation and measurement of
well-being is a more recent development, the
measurement of cognitive skills of children has a
longer history. For example, one widely used
psychometric test focused on measuring chil-
dren’s cognitive development, the PPVT, was
created in 1959 and has been used and updated
since then (Dunn & Dunn, 1965).
The original design of this test started with the
intention to assess children’s English vocabulary
in contents of standard American English, so the
test design had a child select the best option from
a set of four pictures as a response to the
assessors’ spoken scenario. The academic litera-
ture has utilised PPVT scores extensively as a key
measurement for receptive first-language skills,
early childhood language development, school
readiness and more generally as cognitive devel-
opment measure of young children Long (2012);
Lopez Boo (2013); Paxson and Schady (2007);
Schady (2011); Vogel et al. (2006). Although the
PPVT is primarily a verbally oriented test
(Campbell, 1998), it has been shown to be a
suitable measure for more general cognitive
skills, including metalinguistic skills (Van
Kleeck, 1982), and a suitable screening device
for intellectual development deficiencies (Camp-
bell et al., 2001), leading to its use as a measure
of general cognitive development here.
The test has also been translated into other
languages with varying degrees of deviation from
and comparability to the original English version,
though Leon and Singh (2017) points out that the
Spanish version of PPVT, which is used as a data
source in this paper, is very close to the original;
therefore, we are confident that our results are
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53
comparable to studies utilising the English
language version.
Several studies have used PPVT scores to
investigate the impact of personal, family and
other environmental factors on the cognitive
development of children. This includes the
mother’s language and vocabulary skills
(Schady, 2011), the children’s socioeconomic
status, health and their parents’ parenting
discipline 2 (Schady, 2011), and the family’s
socioeconomic status (Fernald et al., 2011; Nau-
deau et al., 2011). This also extends to the use in
medical studies, where they were one of a set of
outcome measures that link the child’s develop-
ment with the mother’s intake of various ele-
ments, such as vitamins B6 and B12, omega-3
fatty acids or folic acid (Guilarte, 1993; Gao
et al., 2016; Rathod et al., 2016).
The exploration of the link between cognitive
development and subjective well-being fits
loosely within Bronfenbrenner’s bioecological
model and the PPCT formalisation, which high-
lights the interconnected influence of ecological
factors on child development along the dimen-
sions of Proximal processes, Persons, Context and
Time (Bronfenbrenner & Ceci, 1994; Tudge
et al., 2009). While our analysis addresses the
latter three dimensions 3 in line with the model,
the core relationship between a child’s subjective
well-being and their cognitive development
differs subtly from the interaction-oriented Prox-
imal processes.
The link between subjective well-being and
development is closely related to the impact of
stress, which has been shown to negatively affect
child development (Nelson et al., 2014). This
literature, in line with Bronfenbrenner’s model
and Proximal processes, focuses on external
interactions as a source of the impact (Hertz-
man, 2012). Establishing the impact of a child’s
subjective well-being complements those
approaches with a focus on an internal, rather
than external, dimension of the processes and
interactions influencing child development.
While it is common to distinguish the impact
along certain child characteristics (Nelson
et al., 2014), as called for by the Persons and
2
These results were obtained using the Spanish
language version of the test.
3
Persons is covered by looking at male and female
children separately, Context by urban–rural and
private–public schooling and Time through the panel
structure.
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54 ECONOMIC RECORD DECEMBER

Context dimensions in Bronfenbrenner’s model,
our contribution here also highlights the differ-
ential impact along the outcome dimension, so the
level of development of the child. This quantile
approach follows a related literature on the
mental health of children and the impact of
stress-inducing environmental factors and condi-
tions (Baryshnikova & Pham, 2019; Jayawardana
et al., 2022).
III Data
(i) Data Source
Our analysis is based on the Young Lives
Longitudinal Survey (YLLS) which is a contin-
uous longitudinal survey for four developing
countries: Ethiopia, Peru, Vietnam and some
parts of India (Andhra Pradesh and Telangana).
There are six rounds 4 for two cohorts: an older
cohort of children aged 5 at the first wave and a
younger cohort of children who were born at the
time of the first round.
We select the Peruvian young cohort dataset
rounds 3–5 for the analysis. We drop rounds 1 and 2
due to the low, preschool age of the cohorts, while
round 6 is dropped due to changes in connection
with the COVID-19 pandemic. The selection of
Peru is due to inconsistencies in the PPVT scores in
the other regions. Additionally, one older cohort
was removed as some well-being questions were
not administered to them. This results in 4,018
observations of 1,410 individual school-age chil-
dren between the ages of 7 and 16 who were
observed at least twice during this period.
PPVT ¼ Raw120Score  100. This results in an aver-
age PPVT score of 64.72, with a standard
deviation of 18.70.
The main independent variable, representing
subjective well-being, is based on another YLLS
question. Children were shown the ladder illus-
trated in Figure 1, commonly referred to as
Cantril’s ladder (Cantril, 1965), and asked ‘where
on the 9-step ladder do you feel you personally
stand at present?’. The top step 9 represents the
highest level of well-being, while the bottom step
1 is the worst. Based on the child’s numerical
answer, we create an indicator variable, ‘unsat-
isfactory subjective well-being’, which takes on a
value of one if a child reports a subjective well-
being from 1 to 4. This approach follows Singh
et al. (2019).
The decision to use a binary categorisation for
the subjective well-being score with a threshold
of four for low well-being follows common
practice in the related research literature (Singh
et al., 2019) as well as public health
(OECD, 2020). The advantages of this approach
include a clearer and more intuitive interpretation
of the results and a closer alignment with
practices in public health initiatives and related
guidelines (OECD, 2020). Additionally, it
addresses potential scale issues, where equal
differences between ladder values do not
F IGURE 1
Ladder Card

(ii) Variables for Subjective Well-Being and

Cognitive Development
The two main variables of interest are measures
for the cognitive development of children and for
their subjective well-being.
For the outcome variable, cognitive develop-
ment, we use a normalised PPVT score. The
administered test consists of 120 questions as
described earlier, is untimed and participants are
allowed to skip questions if they feel uncomfort-
able. The Young Lives dataset contains the raw
scores of PPVT consisting of the total number of
questions each child did answer correctly. This
raw score is normalised into a percentage score:

4
YLLS1 (2002), YLLS2 (2006), YLLS3 (2009),
YLLS4 (2013), YLLS5 (2016) and YLLS6 (2019–
2020).

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Economic Society of Australia.

2023 WELL- BEING AND COGNITIVE SKILLS
represent equal differences in the perceived well-
being of individuals and mitigates more strongly
related measurement errors, that are due to the
subjectivity of individuals answering the ques-
tionnaire and interpreting the well-being scale.
We choose the cut-off value of four following
the literature, where it is used to identify low
subjective well-being and the potential need for
support and interventions (Singh et al., 2019;
OECD, 2020). Furthermore, this is in line with
Gallup, which includes Cantril’s ladder-based
questions in some of its widely used datasets, and
uses statistical validation and associations with
other well-being indicators to break down the
ladder scores into three independent and distinct
groups: ‘thriving’ (with the ladder score of 7 and
above), ‘struggling’ (the score of 5–6), and
‘suffering’ (the score of 4 and below) (Gal-
lup, 2009, 2012). This, again, categorises low
subjective well-being at a threshold value of 4.
Consequently, 88.45 per cent of observations in
the full sample are categorised as having a high
level of SWB, whereas 11.55 per cent exhibit an
unsatisfactory level. The average PPVT scores
per category show a statistically significant
difference, with children with a high level of
well-being scoring 65.56 on average, while those
with an unsatisfactory SWB only score 58.36 as
shown in Table S2 in the Appendix. Girls exhibit
a higher percentage of unsatisfactory subjective
well-being (12.69 per cent) compared to boys
(10.49 per cent), while children from rural areas
have a higher percentage of unsatisfactory well-
being (17.51 per cent) compared to those from
urban areas (9.4 per cent). 5 Additionally, children
attending public schools show a higher percent-
age of poor SWB (12.37 per cent) compared to
their private school counterparts (7.51 per cent).
Although there is a significant correlation
between low SWB and cognitive development,
there are children with low subjective well-being
in every quartile when the full sample is split into
four quartiles by cognitive development as seen in
the Appendix Table S4. This also holds for the sub-
samples based on gender, location and schooling,
though the absolute numbers of such children are
quite low for the private school quartiles.
(iii) Covariates
We control for a large set of child, parent and
household characteristics. The individual child
5
See Table S3 in Appendix.
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55
characteristics include their gender, school type,
school commute time, age, 6 age squared, health
score and a stunting indicator. Parental variables
include their age, education and whether they live
with their children in the same home. Household
variables include household size, whether they
are recipients of the Juntos programme, the
logarithm of monthly household expenditure and
its decile, dependency ratio, wealth index, hous-
ing quality, electricity and safe drinking water
access, whether they have adequate types of
cooking fuels and proper toilet facilities and
urban status as well as residence region. More
details about the respective variable specifica-
tions are provided in Table S1, while summary
statistics are provided in Table S2.
IV Empirical Strategy
We explore the link between subjective well-
being and cognitive development in school-age
children empirically with three closely related
approaches. The first step uses a fixed effects
panel estimation to account for the impact of
time-invariant influence factors. The second then
builds upon this and extends the analysis with an
IV approach to address potential endogeneity
concerns. Finally, the panel and IV elements are
included in a QR approach, which highlights the
potential heterogeneity along the cognitive devel-
opment distribution in the full sample and within
distinct sub-groups.
(i) Panel Fixed Effects Approach
The first step is to apply a fixed-effects
estimation approach to estimate the effect of
subjective well-being scores on PPVT test scores
while accounting for the influence of time-
invariant characteristics. Here we take advantage
of the panel setting of the YLLS data, whose
multiple rounds allow us to track cohorts of
students over at least two rounds spaced a number
of years apart. This establishes whether the
difference in average scores between children
6
Children’s and parental age are not perfectly
collinear due to differences in the timing of wave
collection, the omission of some children in the middle
wave and changes in the identity of the carers due to
reasons such as death of parents, adoptions and change
in guardians and carers. We have run all estimations
without these age variables, and the results are very
similar to those presented here later on. We include the
variables here due to the high relevance of even small
age differences for child development.

56 ECONOMIC RECORD
with a high and an unsatisfactory level of well-
being can be accounted for by the included time-
variant control variables and by child fixed-
effects. The latter account for time-invariant
characteristics and circumstances, such as gender
or genetics in general, which potentially shape
cognitive development.
This uses the following specification:
Sit ¼ αi þ βUSWBit þ γ 1 IND0it þ γ 2 PAR0it
þγ 3 HH0it þ ϕt þ ϕr þ ϵit (1)
where the outcome variable Sit represents normal-
ised scores on the PPVT test of a child i in round t of
the YLLS. The variable of interest, USWBit , is the
binary indicator variable for the level of subjective
well-being in a particular round t. Additionally,
IND0it is a set of individual characteristics of the
child, PAR0it contains parents’ attributes, while HH0it
includes a set of household factors. The variables αi ,
ϕr and ϕt , are individual, regional and survey round
fixed effects, respectively. ϵit is the error term.
For comparison purposes, we also estimate a
basic OLS regression of cognitive development
scores on the subjective well-being indicator and
the set of control variables to demonstrate how
the fixed-effects model addresses the unobserved
heterogeneity bias present in the OLS
specification.
(ii) IV Framework
The next step is the addition of an IV to the
estimation. Basic summary statistics, OLS and FE
results indicate a correlation between subjective
well-being and cognitive development such that
unsatisfactory well-being is linked to a lower
level of cognitive skills. This is also in line with
expectations based on related literature; see, for
example, the link between objective well-being
and educational outcomes shown by Gutman
et al. (2009) and Gutman and Vorhaus (2012).
This correlation, however, only reflects the
unbiased impact of subjective well-being on
cognitive skills if there is no endogeneity and
reverse effect from cognitive development on a
child’s subjective well-being.
We use a child’s carer’s subjective well-being
score as our instrument. The YL dataset contains
these for all survey rounds. The scores are
consistently measured with a Cantril’s ladder
approach in each round, and therefore they do
show a scale between 1 and 9 and are time-variant
between the different survey rounds. YLLS
normally lists one of the child’s parents as the
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DECEMBER
main carer; more precisely, for 98.43 per cent of
the observations used here it is one of the
biological parents, normally the mother. Conse-
quently, we will refer to parents’ SWB scores for
simplicity. A suitable instrument has to satisfy
relevance and exclusion restrictions, so it has to
induce exogenous variation in children’s subjec-
tive well-being while its impact on the outcome,
the cognitive development of the children, is only
via that effect on the subjective well-being of the
children. This is discussed in more detail in the
following section.
Practically, the IV is used with the least squares
fixed effects specification outlined earlier. To
estimate this we use a two-stage least squares
approach. The standard errors for both, first and
second, stages are clustered on individual level.
The first stage is estimated as a linear probability
model (LPM) as USWB is binary as described
earlier; however, the LPM is preferred over a
discrete choice model here as the explanatory
variable in the first stage, parental subjective
well-being, is discrete and takes on only a limited
range of integer values from 1 to 9
(Wooldridge, 2010).
In addition, the IV is applied to a median
regression specification, more precisely a Powell
QR for the 50th percentile. This provides some
indication of the robustness 7 and applicability of
the IV estimation. Furthermore, it sets the stage
for the application of QR methodology in the
third step, where we utilise it to explore the
heterogeneity of the effect along the cognitive
development distribution. The precise nature of
the quantile IV methodology follows Pow-
ell (2016) and is explained in more detail later on.
Validity of the instrument
The YLLS records not only a child’s subjective
well-being score but also that of its carer. Both
are originally measured in the same format and
range of values.
Normally children spend substantial amounts
of their time with their parents, so children have
substantial opportunities to directly observe
expressions of their subjective well-being. This
is reinforced through the additional attention
children pay to their parents due to them normally
7
The OLS regression minimises the sum of squared
deviations, while the QR at-median minimises the sum
of absolute deviations. This normally makes the QR
more robust to non-normal errors and less sensitive to
outliers.
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2023 WELL- BEING AND COGNITIVE SKILLS 57

being their role models (Wiese & Freund, 2011). parental well-being is also visible quantitatively
Children often mirror the behaviours and views of in Table 1, which displays the coefficient on
their parents, so the outlook, views and general parental SWB when that is added as an indepen-
behaviour of parents reflecting their subjective dent variable into the fixed effects specification.
well-being will influence and shape children’s The effect is insignificant for the overall sample
perceptions as well. Fowler and Christakis (2008) as well as for all subsamples based on gender,
demonstrates that subjective well-being spreads location and school type. Consequently, this
directly through close connections, in particular makes parental SWB scores suitable for use as
family bonds, with the close presence of ‘happier’ an instrument in our specifications.
connections positively influencing the subjective Based on this, we formulate a standard two-
well-being of individuals. This is reflected in our stage model to estimate the effect of SWB on
data in the notable correlation between carers’ cognitive development in children.
and children’s SWB scores, which illustrates the
impact the subjective well-being of parents has on USWBit ¼ ηi þ θPSWBit þ δ1 IND0it
that of their children. þδ2 PAR0it þ δ3 HH0it þ μt þ μr þ νit (2)
Another concern is the potential impact of the
child’s cognitive development of children on and
their parents’ subjective well-being. While Tong
et al. (2021) demonstrate that academic efforts Sit ¼ αi þ βUSWBit þ γ 1 IND0it þ γ 2 PAR0it
and results of young children do indeed affect þγ 3 HH0it þ ϕt þ ϕr þ ϵit (3)
parental well-being, 8 they also demonstrate that
there is no such effect for cognitive development. where Equation (3) represents our structural
One possible reason for the difference is the equation and Equation (2) is the first stage
visibility of academic efforts while parental equation. USWBit is again the binary indicator
awareness of the specific level of cognitive variable for the level of subjective well-being in a
development of their children is normally particular round t, while PSWBit is a discrete
lacking. variable with integer values ranging from 1 to 9
Although many external factors seemingly measuring parental subjective well-being for
influence the cognitive development of children, child i in round t. Additionally, μr and μt are the
any such influence needs to be mediated through a round and time effects respectively, and all other
particular transmission mechanism. One such
mechanism is nutrition,9 which is influenced by
external factors such as poverty, and can shape
T ABLE 1
cognitive development through physiological Exclusion Restriction Diagnostics: Effect of Parental
processes within the body (Nelson et al., 2014). SWB in FE Specification
Our variable of interest, a child’s subjective well-
being, is such a transmission mechanism as well, Samples FE
as it can directly affect cognitive development
through neurological changes while being influ- Full sample 0.052
enced by external experiences and environments. (0.104)
Parental well-being is such an external influence Boys 0.06
that it does not directly affect a child’s cognitive (0.150)
development but needs to go through a child- Girls 0.187
based transmission mechanism such as subjective (0.114)
well-being. This capture of the full effect of Urban 0.059
(0.124)
Rural 0.076
8
They investigate this for the context of China, (0.150)
where in their view the academic success of children Private 0.268
has a particular high salience for parents, therefore also (0.391)
heightening the potential impact of cognitive Public 0.019
development. (0.112)
9
We capture this through including an indicator for
stunting, which is usually a consequence and therefore Notes: * P < 0.1; **P < 0.05; ***P < 0.01. Robust standard
an indicator of malnutrition. errors in parentheses, clustered at province level.

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Economic Society of Australia.

58 ECONOMIC RECORD
variables are specified as for Equation (1). The
main coefficient of interest is β which shows the
impact of a child’s subjective well-being on its
cognitive development at the time of round t.
(iii) QR Approach
Cognitive structures of children and adoles-
cents, such as their mental health, can be shaped by
influence factors in such a way that their impact
differs along the distribution of the cognitive
characteristic (Jayawardana et al., 2022). This
might also apply to their cognitive skill develop-
ment, so we apply a QR approach to understand if
the impact of subjective well-being varies along
the distribution of cognitive development.
As outlined earlier, the first application is to
conduct 50th percentile estimations with and
without the IV for the full sample, which represent
median regressions and allow for a direct effect
size comparison with the fixed effects and IV
results based on equivalent specifications but
different estimation methodologies. 10
To investigate the potential heterogeneity of
the impact we then estimate the specification for
selected percentiles, in particular the 25th, 50th,
75th and 90th ones. This provides a balanced
overview of the effect along the whole distribu-
tion. The additional inclusion of the 90th
percentile explores whether children with rela-
tively very high levels of cognitive development
are more capable to account for their subjective
well-being, thereby potentially mitigating the
impact more effectively than their peers with a
lower level of development.
Methodologically, the main specification fol-
lows Powell (2016) as it allows the inclusion of
an IV-QRFE. This is done to address omitted
variable bias and obtain consistent unconditional
quantile estimates of Sit j USWBit , X it despite a
small number of time periods11 (Powell, 2016,
2020).
10
Although the interpretation of the estimated
coefficients for the effects is directly comparable, the
overall results of the various QRs cannot be used to
draw implications about the least squares results due to
the difference in estimation methodologies.
11
The method uses non-additive fixed effects, which
in comparison to alternative quantile FE estimators
does not alter the interpretation of the estimated
coefficients of the endogenous variable. In addition,
Powell is consistent for small T, is easy to implement
and shows less bias in comparison to other IV-QR
estimators with additive fixed effects.
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DECEMBER
This is based on the approach 12 of Jayawardana
et al. (2022), which argues that applying the
quantile estimation proposed by Powell (2020)
allows deriving unconditional quantiles more
easily even after conditioning on other covariates.
Furthermore, the method permits discrete instru-
ments, providing us with an ideal estimator to
address the endogeneity of subjective well-being
with the above-introduced IV (carer/parental
SWB) and therefore a way to identify the
unconditional quantile treatment effects of SWB
on cognitive development.
The following equation presents the main
specification applying the QR with fixed effects:


QðSit Þ τj jUSWBit , IND0it , PAR0it , HH0it



¼ β τj USWBit þ γ 1 IND0it τj



þγ 2 PAR0it τj þ γ 3 HH0it τj




þμi τj þ μt τj þ μs τj (4)
for all quantiles τj ∈ ð0, 1Þ. The effect of unsatis-
factory subjective well-being of school children
on the cognitive developmental score
of a child
i
in round t is observed by β τj , while γ τj
captures the effects of other explanatory variables
on the school children’s cognitive development
score using quantiles as a function.
For robustness reasons, we also use the quantile
random effects13 (Pooled QR) of Koenker and
Bassett Jr (1978) and the QR with fixed effects
(QRFE) 14 of Machado and Silva (2019) as
comparison benchmarks for the full sample.
Finally, we use the two QR approaches to
explore whether the potential heterogeneity of the
effect along the cognitive distribution exhibits
different patterns within important sub-samples.
This includes estimating the QRs for the same set
of percentiles separately for boys and girls, then
for children in urban and rural locations and
finally separately for public and private school
12
Jayawardana et al. (2022) only analyses a cross-
section while we estimate a panel regression.
13
This approach makes the assumption that regres-
sors and individual effects do not correlate. This
assumption is highly unlikely to be satisfied, though
the problem is addressed by QRFE, which is therefore
the preferred approach.
14
Alternatively to IV-QRFE, the QRFE approach
imposes structural assumptions on heterogeneity and
deals with fixed effects in the more traditional way but
does not address endogeneity issues. The IV version of
Machado and Silva (2019) is not applicable here as it
requires a binary instrument, which is not our case.
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2023 WELL- BEING AND COGNITIVE SKILLS 59

T ABLE 2
OLS, FE and IV Estimates of the Effect of Unsatisfactory SBW on PPVT: Full Sample

OLS FE FE IV 0.5 Q 0.5 Q IV

Variables (1) (2) (3) (4) (5)

Child-unsatisfactory SBW 1.373** 1.276** 0.424 1.807*** 1.583***

(0.570) (0.520) (3.693) (0.178) (0.162)
Child-related covariates Yes Yes Yes Yes Yes
Parental covariates Yes Yes Yes Yes Yes
Household covariates Yes Yes Yes Yes Yes
Individual FE No Yes Yes Yes Yes
Regional FE No Yes Yes Yes Yes
Round FE No Yes Yes Yes Yes
Cragg–Donald statistics 52.055
Kleibergen–Paap statistics 41.132
Stock–Yogo critical values
10% maximal IV relative bias 16.38
15% maximal IV relative bias 8.96
20% maximal IV relative bias 6.66
Observations 4,018 4,018 4,018 4,018 4,018
R2 0.670 0.804 0.803
Number of ID 1,410 1,410 1,410 1,410

Notes: * P < 0.1; **P < 0.05; ***P < 0.01. Robust standard errors in parentheses, clustered at province level. Columns 4 and 5 are
50th percentile estimations with Powell’s model without and with IV, respectively.

students. While these factors are included as
independent dummy variables in the regressions
of the full sample, applying the QR approach to
the respective sub-samples explores whether
there is an interaction effect such that the impact
of subjective well-being is modified through the
combination of cognitive development level and
environmental circumstances.
V Empirical Results
(i) Fixed-Effects Results
The first step is to establish whether time-
invariant factors, such as genetics, can account
for the effect of unsatisfactory SWB on cognitive
development. Table 2 shows the results for the
OLS and fixed-effect specifications,15 with the
negative and statistically significant effect of
unsatisfactory subjective well-being in both
estimations clearly indicating that time-invariant
characteristics only account for a small extent of
the effect found by the OLS estimation.
The magnitude of the effect is very similar for
both, around 1.3 percentage points. This implies
that children who report a low level of well-being
15
Table S6 in the Appendix provides the full results.
trail in their cognitive development in compari-
son with children who report a higher well-being
level. When setting the magnitude of this effect in
comparison to the impact of age the implied gap
is approximately 2–3 months of development.
There are some notable results16 for the
included control variables as well. Height stunt-
ing, so a significantly lower height than normal at
this point of development, has a statistically
significant negative effect, indicating a cognitive
consequence of the physical deficit. Stunting is in
its nature similar to subjective well-being as it is
a direct child characteristic that is shaped by
external factors and represents therefore another
conduit for an effect of these factors onto
cognitive development.
Additionally, different external environments,
such as urban versus rural locations and private
versus public schooling, show an association with
significant differences in the OLS specification,
though not after controlling for fixed effects. This
indication of systematic differences justifies the
deeper exploration of the effect within these
16
Although the FE IV results are only discussed in
the next subsection, the discussed control variables here
all show very high consistency between the FE and FE
IV results.

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60 ECONOMIC RECORD
particular environments. Related, the OLS spec-
ification highlights a development advantage of
girls over boys, which leads to a separate
exploration of boys and girls later on as well.
(ii) Instrumental Variables
The second step is to add the IV to the
estimation. As the FE IV column in Table 2
shows, the main average effect becomes statisti-
cally insignificant when endogeneity between the
two variables is accounted for in this way.
However, this is contrary to the 50th percentile
(median) Powell QR results without and with IV
shown in the ‘0.5 Q’ and ‘0.5 Q IV’ columns
respectively, where the IV estimation retains the
negative and statistically significant effect. The
Powell QR without IV shows an effect magnitude
of 1.8, which is somewhat stronger than its
standard FE counterpart and signifies a 3–
4 month development delay, while the quantile
IV results show an effect size notably different
from the FE IV results,17 yet only marginally
differing from the regular FE one.
Although our FE IV result turns statistically
insignificant, in contrast to the quantile IV one,
the diagnostic results in Table 2 indicate that our
instrument is strong as both statistics for the
identification of weak instruments, Cragg–Donald
F-statistics (52.055) and Kleibergen–Paap F-
statistics (41.132), are greater than the relevant
Stock–Yogo’s critical values. Moreover, Table 3
indicates that the first-stage estimates are statis-
tically significant, so when the parent’s SWB
increases by one point, the probability of being a
child with unsatisfactory SBW decreases by
approximately three percentage points.
Echoing the discussion earlier, these results
need to be taken with a degree of caution as one
of the assumptions made here is that the
instrument of parental well-being is not corre-
lated with any omitted variable in the main
specification. In addition to controlling for time-
invariant factors, such as genes and certain
parental characteristics and preferences, through
the fixed-effects specification, a large set of child,
parental and household controls is included to
17
One possible explanation for the difference is the
use of absolute deviations in the QR, while the standard
IV approach uses squared deviations. The FE estima-
tion at-mean is more sensitive to outliers. Removing
observations outside of +  three standard deviations
brings them marginally closer together, though the FE
IV coefficient remains statistically insignificant.
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DECEMBER
address this. This covers parental age, education
and presence in the household, wealth and class
indicators, as well as child health and stunting.
Although there are a few potential factors, such as
the presence and influence of grandparents, the
extent of parental interactions with the child and
other related circumstances that might ultimately
affect cognitive development, these are likely to
work through the channel of subjective well-
being or another included mechanism such as
child health. As these are more likely positively
correlated with cognitive development and neg-
atively with the indicator for low SWB, omitting
these variables would exert a negative bias.
Omitting factors with a negative association with
cognitive development would similarly lead to a
negative bias on the found results.
(iii) Heterogeneity Effect
The median regression uses the whole distri-
bution but centres the effect on the median. This
leaves open that the impact may be different when
other parts of the cognitive development distri-
bution are focused on.18 To explore this potential
heterogeneity we continue the use of the GMM
QR approach, with and without the IV, and apply
it to the 0.25, 0.5, 0.75 and 0.9 quantiles. 19
There is a clear indication of heterogeneity in
the effects of subjective well-being along the
distribution of cognitive development. This is
visible in Table 3, which shows the results for the
different quantiles for specifications without
(Panel A) and with the IV included (Panel B).20
Those found effects, which are statistically
significant, are fairly robust overall to the
inclusion of the IV, which assuages concerns
about the effect of endogeneity in these
specifications.
The effect is negative and strongest when the
focus is on a percentile in the lower half of the
distribution. The effect size in that half is
somewhat stronger than in the basic fixed effects
specification, so an unsatisfactory level of sub-
jective well-being implies very roughly a gap in
the size of the average age effect of about
18
This also applies to the FE IV result, where the
insignificant average treatment result may mask het-
erogeneity of the effect along the cognitive develop-
ment distribution.
19
This is equivalent to the 25th, 50th, 75th and 90th
percentiles.
20
The results are consistent with those found for the
Pooled QR and QRFE estimations, as seen in Table S7.
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2023 WELL- BEING AND COGNITIVE SKILLS 61

T ABLE 3
Estimates of the Unsatisfactory SBW on PPVT: Full Sample

0.25 quantile 0.50 quantile 0.75 quantile 0.90 quantile

Panel A: without IV
Unsatisfactory SWB 1.910*** 1.807*** 1.087*** 0.114
(0.154) (0.178) (0.036) (0.092)
Observations 4,018 4,018 4,018 4,018
Number of groups 1,410 1,410 1,410 1,410
Individual FE Yes Yes Yes Yes
Year FE Yes Yes Yes Yes
Panel B: with IV
Unsatisfactory SWB 2.205*** 1.583*** 1.040*** 0.846**
(0.062) (0.162) (0.056) (0.340)
Observations 4,018 4,018 4,018 4,018
Number of groups 1,410 1,410 1,410 1,410
Individual FE Yes Yes Yes Yes
Year FE Yes Yes Yes Yes

Notes: * P < 0.1; **P < 0.05; ***P < 0.01. Robust standard errors in parentheses, clustered at province level. All specifications
include the same child, parental and household characteristics.

5 months. The effect is notably weaker at the top
end of the distribution, even turning insignificant
for the specification without the IV. Children with
a high level of cognitive development seem to
have a higher capacity to deal with low subjective
well-being than their counterparts with a com-
paratively lower level of development.
The estimations were also conducted for cut-
offs of 3 and 5 for subjective well-being. The
results follow expectations and show very similar
patterns to those described earlier. The results for
3 are practically equivalent, though the substan-
tially smaller number of children with low SWB
make the estimations less robust as seen for
example in the Kleibergen–Paap statistic falling
below the critical value in the first stage
regression. The cut-off of 5, and the associated
inclusion of substantially more children with
middling levels of well-being into the low well-
being category, still exhibits the same general
pattern, though for some quantiles, especially
those in the higher part of the distribution with
higher cognitive development, the coefficients
become statistically insignificant. Overall, the
found heterogeneity pattern is robust to the exact
specification of low subjective well-being. How-
ever, due to the use of a binary variable, the
results are also consistent with different levels of
subjective well-being not having a differential
effect above (or below) the threshold. This means
that children with middling levels of SWB might
experience the same effect as those with very
high levels. A confirmation of this requires
further exploration beyond this study. The het-
erogeneity revealed by the QRs indicates that the
effect differs for children depending on their state
of cognitive development. However, this does not
have to be the same for important sub-groups;
there could be different patterns within relevant
sub-groups based on particular child characteris-
tics. The following subsections investigate this
possibility by focusing on a number of important
dimensions where differences in child character-
istics or their environment might have such an
impact. 21
The OLS, but not FE, results show strong
effects for female, urban and private school
dummy variables, indicating that these character-
istics are associated with substantial overall
differences in cognitive development. Conse-
quently, we explore whether the heterogeneity
found for the full sample is visible also in the
samples consisting of girls and boys, respec-
tively, students in urban respective rural locations
and all children going to public respective private
school.
21
Given the nature of QRs, the results for two
complementary subgroups do not have to ‘average’ to
the full sample result, reducing the possibility to draw
conclusions from one subgroup result for the other
group.

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62 ECONOMIC RECORD DECEMBER

T ABLE 4
Estimates of the Unsatisfactory SBW on PPVT: Gender Heterogeneity in the Robust Powell QR

0.25 quantile 0.50 quantile 0.75 quantile 0.90 quantile

Panel A: boys
Unsatisfactory SWB 2.399*** 2.365*** 0.622*** 0.834***
(0.087) (0.335) (0.096) (0.141)
Observations 2,079 2,079 2,079 2,079
Number of groups 728 728 728 728
Individual FE Yes Yes Yes Yes
Year FE Yes Yes Yes Yes
Panel B: girls
Unsatisfactory SWB 1.799*** 1.309*** 0.136 1.051***
(0.050) (0.114) (0.227) (0.087)
Observations 1,939 1,939 1,939 1,939
Number of groups 682 682 682 682
Individual FE Yes Yes Yes Yes
Year FE Yes Yes Yes Yes

Notes: * P < 0.1; **P < 0.05; ***P < 0.01. Robust standard errors in parentheses, clustered at province level. All specifications
include the same child, parental and household characteristics.

(iv) Gender Heterogeneity consistently more negative for children on the

Table 4 presents the estimation results for QRs
for the different percentiles when we focus on
gender-specific sub-samples. For boys, the over-
all magnitude and directions of unsatisfactory
SWB adversity look very similar to the full
sample analysis for the lower half of the
distribution, with the effect diverging at the top
by turning positive. For girls, the effect appears
weaker in the lower part, becoming insignificant
at the 75th and then turning back to significantly
negative at the top end 90th percentile. The
divergence between the two sub-samples at the
top end of the distribution points towards
significant gender differences at least for that
part of the distribution. Further exploration to
better understand the reasons for the difference,
and the possible consequences for targeting any
intervention, appears fruitful.
(v) Urban Versus Rural Heterogeneity
Table 5 illustrates our findings for geographic
environments, more specifically for children in
urban and rural areas. In contrast to gender
subsamples, this splits the sample more unevenly,
with approximately 26 per cent of the children
located in rural areas and approximately 74 per
cent living in urban environments. 22 The effect is
22
We remove observations when a child migrates
between the two survey rounds. This also applies to any
moves between private and public schools.
countryside, though the extent of the difference
fluctuates somewhat and becomes widest at the
top end of the distribution where it turns positive
for urban children. As with gender, this points
towards the usefulness of location in targeting
potential interventions.
(vi) Schooling Heterogeneity
The final look at possible heterogeneity of the
effect patterns focuses on the type of school the
child attends through separate samples for public
and private schools. The public school estimation,
which uses 82 per cent of the observations, works
well; the private school sample, however, exhibits
problems. The small sample size, especially for
lower quantiles, feeds into the problem of weak
instruments as indicated by the low Kleibergen–
Paap and Craig–Donald statistics. The results for
both samples are reported in Table 6; however,
the private school numbers need to be taken with
a large degree of caution. The pattern for public
school students is statistically significant and
negative for all tested quantiles, but noticeably
less volatile and flatter than the overall sample
results. The magnitude of the effect is slightly
lower but signifies still a notable cognitive
development delay. The private school results
exhibit a substantially stronger negative effect,
especially for lower quantiles, and although this
is consistent with an amplification of the effect
through this particular environment, the small

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Economic Society of Australia.
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2023 WELL- BEING AND COGNITIVE SKILLS 63

T ABLE 5
Estimates of the Unsatisfactory SBW on PPVT: Rural Versus Urban Heterogeneity in the Robust Powell QR

0.25 quantile 0.50 quantile 0.75 quantile 0.90 quantile

Panel A: rural
Unsatisfactory SWB 2.939*** 2.673*** 1.279*** 0.776***
(0.317) (0.235) (0.269) (0.220)
Observations 1,012 1,012 1,012 1,012
Number of groups 371 371 371 371
Individual FE Yes Yes Yes Yes
Year FE Yes Yes Yes Yes
Panel B: urban
Unsatisfactory SWB 1.956*** 1.548*** 0.930*** 0.975***
(0.303) (0.080) (0.047) (0.151)
Observations 2,917 2,917 2,917 2,917
Number of groups 1,030 1,030 1,030 1,030
Individual FE Yes Yes Yes Yes
Year FE Yes Yes Yes Yes

Notes: * P < 0.1; **P < 0.05; ***P < 0.01. Robust standard errors in parentheses, clustered at province level. All specifications
include the same child, parental and household characteristics.

T ABLE 6
Estimates of the Unsatisfactory SBW on PPVT: Public Versus Private School Heterogeneity in the Robust Powell QR

0.25 quantile 0.50 quantile 0.75 quantile 0.90 quantile

Panel A: public
Unsatisfactory SWB 0.925*** 0.907*** 0.455*** 1.116***
(0.181) (0.087) (0.104) (0.359)
Observations 3,250 3,250 3,250 3,250
Number of groups 1,172 1,172 1,172 1,172
Year FE Yes Yes Yes Yes
Panel B: private
Unsatisfactory SWB 6.377*** 4.566*** 1.109*** 2.076***
(0.477) (0.207) (0.212) (0.047)
Observations 679 679 679 679
Number of groups 332 332 332 332
Year FE Yes Yes Yes Yes

Notes: * P < 0.1; **P < 0.05; ***P < 0.01. Robust standard errors in parentheses, clustered at province level. All specifications
include the same child, parental and household characteristics.

sample size impedes the drawing of definitive
conclusions. Nevertheless, they point towards the
possible relevance of certain environments for the
heterogeneity of the effect.
VI Conclusion
The mental well-being of children can be
negatively affected by events and personal
circumstances. However, until now there was
only limited evidence that linked the level of their
subjective well-being with their personal devel-
opment. One central issue is measurement, as
subjective well-being measures are less well
defined and available than objective ones. This
also goes for cognitive skills development, which
is overshadowed by the use of educational
outcomes, which are also much more easily
available. This paper establishes and demon-
strates that subjective well-being, not just objec-
tive measures, appears to have a notable influence

Ó 2023 The Authors. Economic Record published by John Wiley & Sons Australia, Ltd on behalf of
Economic Society of Australia.

64 ECONOMIC RECORD
on children’s cognitive development beyond
educational outcomes.
This effect is established for school-age chil-
dren in developing countries by utilising the
YLLS for Peru. This data source provides suitable
data through the inclusion of a subjective well-
being score that reflects the children’s perception
of their situation and the administration of the
PPVT, an important tool used to measure the
verbal skill development of children, which also
allows us to draw conclusions about their overall
cognitive development. The inclusion of parental
subjective well-being provides a suitable instru-
ment for an IV estimation, while the use of a
large, nationwide sample also provides the
opportunity to understand the shape of the effect
for particular groups.
While the effect is statistically insignificant in
a fixed-effects IV panel regression at-mean,
Powell (2016) fixed-effects IV QRs show nega-
tive, statistically significant effects. More specif-
ically, the use of a number of quantiles highlights
a certain degree of heterogeneity along the
cognitive development distribution. The effect is
notably stronger for quantiles in the lower part of
the distribution, indicating that a higher level of
cognitive development mitigates to a certain
degree the impact of low subjective well-being.
That pattern of heterogeneity is visible for all
subsamples, so for boys and girls, urban and rural
students, as well as public and private school
ones, though the strength and precise nature of
the gradients differ. Additionally, at the top end
of the distribution, the effect varies more widely,
from positive significant (e.g. for boys) to a
gradient reversal and strongly negative effect
(e.g. for girls). The differences in the effect along
the overall distribution as well as between major
sub-groups indicate that interactions between
characteristics such as gender and geographical
environment should be explored further so as to
facilitate a more systematic targeting for any
potential intervention.
This study highlights that understanding the
possible heterogeneity for mechanisms involving
well-being and cognitive development is an
important step in formulating and implementing
policies to pro-actively enhance the cognitive
development of children as well as to mitigate
potential negative influences affecting their well-
being. Differences between groups also point to
the fruitfulness of future research into the exact
shape of the effect of well-being and the role
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DECEMBER
different environments and other conditional
factors play for a lasting impact on children.
Supporting Information
Additional Supporting Information may be
found in the online version of this article:
Table S1. Variable Description
Table S2. Summary Statistics
Table S3. Proportion of Children with USWB
Table S4. Proportion of USWB in Sample
Quartiles by Cognitive Development
Table S5. First-Stage IV Diagnostics
Table S6. OLS, FE, and FE with IV Estima-
tion: Full Sample
Table S7. Estimates of the Unsatisfactory SBW
on PPVT: Full Sample
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