Chapter 3: Spatial variation in life satisfaction: a happiness puzzle
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This chapter presents evidence of the spatial variation in self-reported life satisfaction (LS) measured at the national, regional or local levels by a variety of datasets at different geographical scales. The chapter offers alternative explanations for the observed differences in LS across locations that remain after controlling for individual sociodemographic characteristics: the strict conditions for an interurban equilibrium in hedonic markets may not hold; individuals in different countries and regions may have different reporting styles and norms, including different expectations and aspirations, which could be shaped by culture; or individuals may be trading off their current happiness for higher incomes or some other benefits. Finally, the chapter discusses empirical strategies that could be adopted to minimize potential biases induced by these factors, and suggestions on how to try to disentangle the various interpretations. 

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