The role of subjective well-being in measuring well-being

What people feel about their lives matters. A nation of materially wealthy, healthy, but miserable citizens is not the kind of place where most people would want to live. The available evidence suggests that the general public, at least in affluent countries, do regard subjective well-being as an important component of national well-being overall. For example, Dolan and Metcalfe (2011) report an initial survey asking UK respondents to rank seven ways of measuring progress, in which “people’s happiness” was ranked behind the “state of the economy” and “peoples’ health”, but above “crime rates”, “education levels”, “the environment” and “depression rates”.

A recent public consultation by the UK Office for National Statistics (ONS, 2011a) found that 79% of 6 870 respondents endorsed “life satisfaction” as a measure of “national well-being and how life in the UK is changing over time” - second only to “health statistics” (80%), with measures such as “income distributions” endorsed by 62%, and “economic measures such as GDP” endorsed by just 30% of respondents. The OECD’s web-based interactive tool Your Better Life Index offers individuals the opportunity to create their own international well-being index, rating the importance of 11 different dimensions of well-being on a 1-5 scale. Ratings shared by around 4 000 users of the website (OECD, 2011b) indicate that life satisfaction is the domain most often ranked the highest (with over 10% of users identifying it as the most important domain), closely followed by health, education, the environment and work-life balance.2

One benefit of using subjective well-being to complement existing measures of national progress is that it emphasises the views of individuals. It thus presents an overall picture of well-being that is grounded in people’s preferences, rather than in a priori judgements about what should be the most important aspects of well-being. Subjective well-being measures reflect the unique mix of factors that influence an individual’s feelings and assessments. This is not to say that subjective well-being should replace other important economic, social and environmental indicators, but it does provide a useful and easy-to-understand complement to existing measures, because it can indicate the combined impact of life circumstances on subjective perceptions and emotions.

Subjective well-being measures may also capture some aspects of well-being that are difficult to otherwise observe or quantify through more traditional measures. An example of this, cited in Chapter 1 (Box 1.2), is the marked decline in evaluative measures of subjective well-being in Egypt and Tunisia in the years preceding the 2011 “Arab Spring”. Conventional indicators of progress, such as economic growth, and the UN’s Human Development Index, continued to rise during this period - thus failing to detect an important social trend.

The public policy applications of subjective well-being measures (described in Chapter 1) are wide-ranging. Extensive reviews on this topic have been published recently by Diener, Lucas, Schimmack and Helliwell (2009), Bok (2010), the European Commission (Chapple et al., 2010), and the New Economics Foundation (Stoll, Michaelson and Seaford, 2012). These reviews build on the earlier conceptual work of Kahneman et al. (2004), Layard (2005), Dolan and White (2007) and Krueger (2009), to name just a few. Specific examples from the field include using life satisfaction and eudaimonic indicators alongside a wide variety of outcome measures to evaluate public projects to enhance well-being, such as the UK Big Lottery Fund well-being evaluation (CLES Consulting and NEF, 2011); and the evaluation of the Community Employment Innovation Project in Canada (Gyarmati et al., 2008), as well as for cost-benefit analyses of psychological therapy (Layard et al., 2007), estimating the well-being impact of various policy-relevant daily activities, such as commuting (Kahneman and Krueger, 2006; Stutzer and Frey, 2008), as well as to explore policy trade-offs, such as those between inflation and unemployment (DiTella, MacCulloch and Oswald, 2001) or income and airport noise (Van Praag and Baarsma, 2005). Research linking subjective well-being, and particularly positive affect, to health outcomes (Pressman and Cohen, 2005; Danner, Snowdon and Friesen, 2001; Cohen et al., 2003; Kiecolt-Glaser et al., 2002; and Steptoe, Wardle and Marmot, 2005), as well as income, employment outcomes and productivity (Diener et al., 2002; Wright and Staw, 1999; Keyes 2006; Clark and Oswald, 2002) also suggests a public interest in monitoring such measures.

Like many other measures of well-being, however, subjective well-being data do come with some notable caveats and trade-offs, specifically around data comparability and the risk of measurement error (Ravillion, 2012; see Chapter 2 for a summary). Some of these risks are common to other self-report measures, including the risk of various response biases, and the impact that both question wording and response formats can have on how people answer questions. Frame-of-reference effects3 and adaptation4 to life circumstances over time can also potentially influence the levels of subjective well-being observed among different populations and population sub-groups, as well as the nature of the relationship between subjective well-being and its determinants. These issues mean that subjective well-being data, like most self-reported data, need to be interpreted with care and should be used to complement rather than replace other indicators of well-being. Interpretive issues are described at length in the sections that follow.

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