Quality of life and location-specific amenities : a subjective well-being approach

In recent years, economists have started using socio-economic and socio-demographic characteristics to explain self-reported individual happiness or satisfaction with life. Using data disaggregated at the individual and regional level, this paper shows that while these variables are relevant, consideration of amenities such as climate, environmental and urban conditions, typically employed in hedonic wage and housing regressions, is critical when analysing subjective well-being. Location-specific factors are shown to have a direct impact on life satisfaction, suggesting that their effect on quality of life is not fully captured by compensating differentials in housing and labour markets.