Elements of subjective well-being

Life evaluation

Life evaluations capture a reflective assessment on a person’s life or some specific aspect of it. This can be an assessment of “life as a whole” or something more focused. Such assessments are the result of a judgement by the individual rather than the description of an emotional state. Pavot and Diener et al. (1991) describe the process of making an evaluation of this sort as involving the individual constructing a “standard” that they perceive as appropriate for themselves, and then comparing the circumstances of their life to that standard. This provides a useful way to understand the concept of life evaluation, although in practice it is not clear whether the process of comparison is a conscious one if respondents more commonly use a heuristic to reach a decision.

There is evidence that the construct captured by life evaluation is closely related to that used by people when they make a conscious judgement that one course of action is preferable to another (Kahneman et al., 1999; Helliwell and Barrington-Leigh, 2010). The underlying concept being measured is thus, in some senses, relatively close to an economist’s definition of utility. However, economists usually assume (at least implicitly) that the remembered utility on which people base their decisions is equivalent to the sum of momentary utilities associated with moment-by-moment experiences. This is not the case. Life evaluations are based on how people remember their experiences (Kahneman et al., 1999) and can differ significantly from how they actually experienced things at the time. In particular, the so-called “peak-end rule” states that a person’s evaluation of an event is based largely on the most intense (peak) emotion experienced during the event and by the last (end) emotion experienced, rather than the average or integral of emotional experiences over time. It is for this reason that life evaluations are sometimes characterised as measures of “decision utility” in contrast to “experienced utility” (Kahneman and Krueger, 2006).3 Despite this limitation, the fact that life evaluations capture the same sort of construct that people use when making conscious decisions and align closely to the conception of individual welfare that is grounded in the conventional economic paradigm makes them of high interest to researchers and policy-makers.

The most commonly used measures of life evaluation refer to “life as a whole” or some similar over-arching construct. However, in addition to global judgements of life as a whole, it is also possible for people to provide evaluations of particular aspects of their lives such as their health or their job. In fact, there is good evidence that a strong relationship exists between overall life evaluations and evaluations of particular aspects of life. One of the most well documented measures of life evaluation - the Personal Wellbeing Index - consists of eight questions, covering satisfactions with eight different aspects of life, which are summed using equal weights to calculate an overall index (International Wellbeing Group, 2006). Similarly, Van Praag, Frijters and Ferrer-i-Carbonell (2003) use panel data from the German Socio-Economic Panel to estimate overall life satisfaction as a function of satisfaction with six specific life domains (job satisfaction, financial satisfaction, house satisfaction, health satisfaction, leisure satisfaction and environmental satisfaction), while controlling for the effect of individual personality. These approaches are important because they establish that evaluations of specific aspects of life have a meaningful relationship with overall life evaluations; this therefore suggests that the scope of life evaluations covered in these guidelines needs to encompass specific as well as general measures.

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