Unobserved Heterogeneity in the Cognitive Facet of Subjective Well-Being

Abstract Subjective well-being (SWB) is central to assessing societal prosperity. Key cognitive indicators of SWB include perceived overall life satisfaction (LS) and domain-specific satisfactions, such as satisfaction with one’s financial situation. The present study uses cross-sectional EU-SILC data to investigate the unobserved heterogeneity in the relationships between LS and its various domain-specific satisfactions. The dataset includes items measuring domain-specific satisfactions as well as socio-economic and demographic variables, and covers more than 150,000 working people from 32 European countries. As job satisfaction is considered as an important domain of LS, the study focuses on the working population. The findings reveal considerable unobserved heterogeneity in the impact of the domain-specific satisfaction on LS among working people in European countries. Three distinct subgroups are identified and categorised according to theoretical considerations in the literature. The results suggest that a one-size-fits-all approach to enhancing the cognitive aspect of SWB is ineffective, highlighting the need for tailored strategies to address the preferences of these subgroups.