Challenges in the interpretation of subjective well-being valuations
The valuation of non-market factors using subjective well-being data is still in its infancy. As the analytical methods on which valuations are based are very similar to those used to investigate the drivers of subjective well-being, all of the interpretive challenges discussed in the previous section also apply here. Rather than repeating the previous section, however, the focus here will be on the implications these issues have for how monetary valuations should be conducted and interpreted - including data requirements and co-variates to include in analyses. Four factors, in particular, bear on valuations based on subjective well-being:
- • Sensitivity of life evaluations - and what can and cannot be valued through this approach.
- • Measurement error in estimating regression coefficients.
- • Correlations among independent variables and the co-variates to include in regression models.
- • Time horizons over which analyses are conducted.