Happiness over the Life Coursewhere income is measured in dollars and education in years.
From this type of equation we can predict that one extra
dollar of income will increase life- satisfaction by ∝ 1 points
(measured as usual on the scale of 0– 10). And likewise one
extra year of education will produce an extra ∝ 2 points of
life- satisfaction. And so on.
This is essential knowledge if we are to compare the effects
of alternative policies to raise well- being— by, for example,
raising earnings, expanding education, reducing unemploy-
ment, improving health, and so on. In each case we need to
know how many points of additional life- satisfaction result
from each type of improvement.
A quite different issue is how far do inequalities in in-
come, education, employment, health, and so on explain
the huge variation in happiness shown in the diagram. In
this case we have to take into account not only the effect
of having extra income, which is measured by ∝ 1 , but also
the extent to which income varies in the population. The
most natural measure of such variation is the standard devi-
ation (SD).^4 So one natural measure of the variation in life-
satisfaction produced by income inequality (other things
equal) is ∝ 1 SD (Income). And that amount of variation rel-
ative to the overall variation of life- satisfaction is what we
shall call β 1 where
β 1 =
α 1 SD (Income)
SD (Life–satisfaction)And so on for each other factor.
These β- coefficients are partial correlation coefficients.
They show the correlation of, for example, income and
life- satisfaction, holding all else constant. They are also