“Measuring and Testing the role of Components of Life Satisfaction”

Shui-Ki Wan, Hong Kong Baptist University

Long Zhao, University of Alberta

We propose a framework to divide the gross effect of four major determinants of life satisfaction into direct and indirect effects via three highly correlated components – financial satisfaction, health satisfaction and life control. Because these indirect effects are highly nonlinear in their parameters across four separate linear regression models, plagued by  heteroscedasticity,  non-normality  in  the  residuals  and  measurement  error  in  the variables, we apply the wild bootstrap procedure to test for their significance. Using three recent waves of World Values Survey from six countries, we find that the relative importance of life control with respect to the other two domains has increased significantly over the past two decades. To facilitate the pursuit of life satisfaction, policy endowing citizens with the right to enjoy the basic freedoms and liberties of life may be more effective.