The Determinants of Subjective Economic Well-being: An Analysis on Italian SILC Data

Using Italian data on Income and living conditions for the year 2005, the paper investigates the main determinants of households’ subjective economic well-being by means of a Partial Proportional Ordered Logit Model. According to a joint subjective and objective perspective of analysis, we use as dependent variable the perceived ability of households to make ends meet. Whereas, we use as explanatory variables some objective aspects of living conditions relating to housing, financial equilibrium, possession of durables and quality of residence place and some socio-demographic characteristics. The empirical results show that the financial strain is the most relevant dimension of living conditions influencing the subjective economic well-being, but its effect is attenuated depending on the level of education and the tenure status of accommodation. Actually, when the highest levels of education are coupled with the status of self-employee and house-owner households have more chances to reach a higher probability to be economically satisfied. The insights coming out from the results may call for different policy measures depending on the degree of well-being and the characteristics of households. In particular, more efficient policies would be oriented to sustain the households’ income, to encourage to buy a house and to allow young people to get the highest levels of education.