Impact of country of residence

82. Adding country fixed effects²⁶ into the baseline model (described at Annex 9; full results provided in Annex 10) adds substantially (between 6 and 9%) to the proportion of variance explained in each of the outcomes (total model R² = 0.267 in the case of life evaluations, 0.095 for positive affect, 0.080 for negative affect, and 0.10 in the case of affect balance). With few exceptions, the coefficients associated with the baseline model variables maintain their direction and significance, the most marked being that several year dummies become weaker or non-significant.²⁷ The negative effect of being born abroad on life evaluations also becomes significant (p< .001) when country fixed effects are introduced. Coefficients associated with country fixed effects are generally highly significant: 141 country fixed effects are significant at the p< 0.01 level when taking Viet Nam as the reference country²⁸). This suggests that, as might be expected, a person’s country of residence has a considerable impact on their subjective well-being, over and above measured individual differences in demographic and socio-economic variables, such as education, employment, income, etc.

83. Figure 17 illustrates the country fixed effects estimated for life evaluation, with countries and territories grouped by quintiles of the country fixed effect (detailed results for each country are also provided in Annex 10). The mean average coefficient (using Viet Nam as the reference country) was -0.171, with a standard deviation of 0.795. The largest positive coefficients are found in Costa Rica, Switzerland, Denmark, Mexico and Iceland. All other things being equal, residing in these countries raises life evaluations, on average, by between 1.3 and 1.5 scale points (on a 0-10 scale), relative to Viet Nam which has around average levels of life evaluation. Strongly positive coefficients tend to be clustered in Northern Europe (as well as Austria and Switzerland), the Americas (with the exceptions of Honduras, Nicaragua, Ecuador, Peru, Bolivia, Paraguay and Uruguay), and Australasia, as well as Thailand, Oman and United Arab Emirates.

84. In contrast, the largest negative coefficients are observed in Togo, Syria, Bulgaria, Comoros and Benin. After controlling for differences in measurable life circumstances at the individual level, residing in

26 i.e. a set of dummy variables, each one representing a different country or territory in the analysis, with Viet Nam used as the reference country.

27 The relationship between gender and positive affect also becomes non-significant, as does the effect of living in a village (relative to a rural area) on positive affect, negative affect, and affect balance overall.

28 Viet Nam was selected as the reference country in all analyses as the average response in Viet Nam was reasonably close to the median average country response across all four subjective well-being outcomes examined here.

these countries reduces average life evaluations by between 1.4 and 1.9 scale points. Strongly negative coefficients are found in a large number of African countries (Senegal, Côte d’Ivoire, Togo, Benin, Niger, Chad, Central African Republic, Republic of the Congo, Gabon, Kenya, the United Republic of Tanzania – hereafter Tanzania, Botswana, and Madagascar), several parts of the Middle East and North Africa (Egypt, Yemen, Syria, Iran, Lebanon), central and South Asia (Afghanistan, Tajikistan, Sri Lanka, Cambodia) and Eastern Europe and EECCA countries (Armenia, Georgia, Ukraine, Bulgaria, Former Yugoslav Republic of Macedonia (hereafter FYROM), and Hungary).

Figure 17: Life evaluation coefficients (2009-2013)

Notes: CFEs by shown by quintiles; Controls: Survey year, age, age², gender, marital Status, number of children, income, education, area of residence (urban, rural etc.) employment status, immigrant status, migrated to country <5 years ago.

85. Figure 18 shows the country-specific coefficients in the case of positive affect. Countries with the largest positive coefficients are: Indonesia, Lao PDR, Paraguay, Trinidad and Tobago, and Thailand.

Living in these countries raises the level of positive affect experienced, on average, by between 0.6 and 0.7 points on a 0-3 scale (again, relative to Viet Nam). Generally, the strongest positive coefficients in East and Southeast Asia (with the exception of Cambodia), Latin America (with the exceptions of Peru, Chile, Bolivia and Brazil), and a handful of African countries (Mali, Tanzania, Malawi, South Africa, Lesotho and Swaziland). The positive country fixed effect for affect in Sri Lanka, Tanzania and Malawi is in stark contrast with the strongly negative coefficient on life evaluations in these countries.

86. The countries with the largest negative country coefficients on positive affect are: Armenia, Serbia, Georgia, Iraq and Lebanon. Residing in these countries is associated with an average reduction in positive affect of between 0.4 and 0.5 scale points. Generally, negative coefficients tend to cluster around Central and Eastern Europe and EECCA countries, the Middle East and North Africa (with the exception of Saudi Arabia, United Arab Emirates, Kuwait, and Morocco), and several African nations (Mozambique, Gabon, Togo, and Sierra-Leone).

Figure 18: Positive affect coefficients (2009-2013)

Notes: CFEs by shown by quintiles; Controls: Survey year, age, age², gender, marital Status, number of children, income, education, area of residence (urban, rural etc.) employment status, immigrant status, migrated to country <5 years ago.

87. The country-specific coefficients associated with negative affect are illustrated in Figure 19.

Very large positive coefficients, and therefore the highest levels of negative affect (all else being equal) are found in Syria, Iran, Iraq, Armenia and Israel. Residing in these countries is associated with an increase in negative affect ranging from 0.7 to 1.1 scale points on a 0-3 scale. The strongest positive coefficients tend to be concentrated around Southern Europe (Portugal, Spain, Italy, Greece), Central and Eastern European countries (Bosnia and Herzegovina, Serbia, FYROM, and Romania, the Slovak Republic and Slovenia), Middle East and North Africa (Egypt, Lebanon, Jordan, Syria, Turkey, and Iran), and a handful of countries in Southeast Asia (Philippines and Cambodia), Africa (Angola and Togo), and Latin America (Ecuador, Peru and Bolivia). It is notable that the Americas tend to be characterised by reasonably high levels of both positive and negative affect.

88. The lowest country fixed effects for negative affect – when socio-economic and demographic variables are controlled for – are Rwanda, Mali, Niger, Ethiopia and Burundi. The average reduction in negative affect (relative to Viet Nam) in these countries was between 0.15 and 0.25 scale points. Other countries with negative coefficients include parts of South and Southeast Asia (Mongolia, China, Thailand, Sri Lanka) several EECCA countries (Kyrgyzstan, Uzbekistan, Turkmenistan), and a wide range of Southern, Eastern and Western African countries. Again, the very low levels of negative affect in Tanzania, Benin, Senegal, Niger and Madagascar are in sharp contrast with the very low life evaluations in these countries.

Figure 19: Negative affect coefficients (2009-2013)

Notes: CFEs by shown by quintiles; Controls: Survey year, age, age², gender, marital Status, number of children, income, education, area of residence (urban, rural etc.) employment status, immigrant status, migrated to country <5 years ago.

89. Finally, results for affect balance (positive emotions minus negative emotions) are shown in Figure 20. Coefficients were highest in Trinidad and Tobago, Thailand, Indonesia, Paraguay and China, where positive affect balance was between 0.59 and 0.74 scale points higher (on a -3 to +3 scale) than in the reference country, Viet Nam. Generally, the most positive coefficients are clustered in parts of Asia (China, Nepal, Myanmar, Thailand, Lao PDR, Indonesia Malaysia, and Sri Lanka), pockets of Latin America (Costa Rica, Panama, Venezuela, Suriname, Paraguay) and parts of West and South/East Africa (Senegal, Mauritania, Mali, Niger, Kenya, Tanzania, Malawi, Zimbabwe, South Africa, and Lesotho).

90. Country specific effects for affect balance were most negative in: Armenia, Syria, Iraq, Serbia and Iran – where positive affect balance was reduced, on average, by between 1.13 and 1.3 scale points.

Generally, the most negative affect balance scores cluster in the Middle East and North Africa (Yemen, Libya, Egypt, Lebanon, Jordan, Syria, Iraq, Iran, Turkey), EECCA countries (Belarus, Georgia, Azerbaijan, Armenia, Republic of Moldova) and some Central and Eastern European countries (Hungary, Slovak Republic, Slovenia, Romania, Lithuania, Croatia, FYROM, Serbia, Bosnia and Herzegovina).

Figure 20: Affect balance coefficients (2009-2013)

Notes: CFEs by shown by quintiles; Controls: Survey year, age, age², gender, marital Status, number of children, income, education, area of residence (urban, rural etc.) employment status, immigrant status, migrated to country <5 years ago.

91. Country fixed effects thus play an important role in explaining variance in subjective well-being outcomes at the individual level. For life evaluations, country fixed effects range from a high of +1.505 in Costa Rica to a low of -1.928 in Togo, which is a 3.43 scale point difference in total on a 0-10 scale. For positive affect, they range from +0.711 in Indonesia to -0.505 in Armenia, a total of 1.216 scale points on a 0-3 scale. For negative affect, the range is +1.051 in Syria to -0.253 in Rwanda, which is 1.304 scale points, again on a 0-3 scale. Finally, for affect balance, country fixed effects range from +0.744 in Trinidad and Tobago to -1.302 in Armenia, a difference of 2.046 scale points on a -3 to +3 scale.

92. There are many possible explanations for these results. One of the most obvious is political stability: several places experiencing conflict do worse on subjective well-being measures than their current economic circumstances alone might indicate. Similarly, living in more developed countries often means having greater access to high-quality public services and amenities, even in the absence of a high income at the individual level. Higher levels of trust, freedom and the quality of governance could also be factors that operate at the society – rather than the individual – level to raise overall subjective well-being.

In addition to differences in countries’ life circumstances, country fixed effects could also reflect a degree of cultural impact (i.e. a real effect of culture on people's subjective well-being) or cultural bias (i.e.

different cultures respond to questions in subjective well-being using the response scale in different ways).

93. In Sections 6 to 8, the country fixed effects (or CFEs) presented here will become the dependent variables of interest. Three different techniques are used to explore the CFEs in greater depth, to better understand their likely origins – including to what extent CFEs might reflect cultural impacts, cultural biases, or other omitted variables. For each of these analyses the maximum proportion of the country fixed effect that can be accounted for by the combined impact of cultural impact, cultural bias, and omitted variables at the country level is described. This estimate also serves as an upper limit to the size of cultural bias: if there are no omitted variables and no genuine cultural impact on subjective well-being then the full impact would be bias. In fact, this is unlikely to be the case, so the estimates produced are expected to be greater than actual cultural bias.

6. Do cultural factors help to explain the impact of country of residence on subjective