interest here is the broad range of _external factors_ that are found in people’s environment and can be influenced by policy (employment, fostering strong communities with low levels of crime and reducing poverty, for example).

The statistical models applied here consider the coefficients of many factors simultaneously. The paper controls for both personal and external influences and assesses their relative effects. For our analysis, we largely use ordered probit regressions, for which the dependent variable is the level of subjective wellbeing, taking values 0 (the worst life possible) to 10 (the best life possible). An ordered probit model is appropriate as the dependent variable has a natural order but no cardinal rank (see Table 1 for a list of all variables applied).

# **3. Results and discussion**

For policy makers it is critical to know what objective features that policy can influence are most important for people’s subjective wellbeing. The first model presented below (a basic model of background traits) assesses the effects of demand variables in influencing people’s levels of subjective wellbeing in Colombia, while all other models take into account supply variables: the degree to which public health and education services are well or poorly delivered. The regression results of the econometric models are presented in Table 1 below; the last column reflects basic descriptive statistics of the explanatory variables employed.<sup>8</sup> _More education is associated with improved wellbeing._ Much literature provides evidence of the importance of education in underpinning economic production and welfare but education independently also matters for people’s quality of life, even after controlling for the higher income it brings. The results in Table 1 show that in comparison to those who have not completed primary education (the reference group), Colombians who complete secondary and especially university/superior education are more satisfied, with everything else (individual, household, community and supply factors) being equal. This is likely partly because higher levels of education not only help to improve people’s lives in areas like health and increase civic and political participation but it also facilitates skills, knowledge and competences which are needed to effectively participate within society and the labor market and make one more likely to find a good job and earn sufficient income (Krauss 2012).

_People falling into the second (and especially) third income tercile are more satisfied with their lives compared to those in the poorest tercile (all other things equal)_ .<sup>9</sup> Yet the income effect drops by more than half if the poor (those in the poorest tercile) are omitted from the sample, which could be seen as a potential proxy for the remaining sample meeting their basic needs.<sup>10</sup> Results are similar when using self-reported, subjective measures of poverty: the positive effect of being in the second or richest income tercile on subjective wellbeing is significantly reduced if respondents, who reported that their salary/wage and total household income were insufficient, were omitted from the sample (results not shown in table).

> 8 For information on descriptive statistics, see not only the basic descriptive data averages in the last column of each table presenting the regression results, but also table 4 in the annex.

> 9 For a discussion on the relationship between income and subjective wellbeing see: Easterlin 1974; Easterlin _et al._ 2010; Hagerty and Veenhoven 2003; Stevenson and Wolfers 2008.

> 10 Analysing the poor as those falling into the bottom tercile seems appropriate as the national poverty line was 37.2 percent in 2010 (World Development Indicators Database 2012). It is worth mentioning that 9 percent of survey respondents who are working did not provide their income levels, reflecting a degree of reluctance in providing income information.

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