OUTLINE

1. Economic growth, development and well-being

2. Subjective well-being
WELL-BEING
3. How we measure well-being

Course: Global Development 4. Global data on well-being

Prof.: Elena Rotarou
5. Data on well-being for Chile

6. Easterlin Paradox

7. Determinants of well-being

October 27th, 2016 2

Economic growth, development and well-being

Inclusion and quality of life are major concerns for government and
society

Rapid economic growth has reduced absolute poverty…

...but well-being is broader than economic well-being...

ECONOMIC GROWTH, DEVELOPMENT AND WELL-BEING

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 Economic growth, development and well-being

2011 United Nations General Assembly’s Resolution 65/309:

“... GDP by nature was not designed to and does not adequately reflect
the happiness and well-being of people in a country.”

Resolution invited Member States “... to pursue the elaboration of

additional measures that better capture the importance of the pursuit of
happiness and well-being in development with a view to guiding their SUBJECTIVE WELL-BEING
public policies.”

“Equity, dignity, happiness, sustainability – these are all fundamental to

our lives but absent in the GDP. Progress needs to be defined and
measured in a way which accounts for the broader picture of human
development and its context”

Source: Helen Clarke, UNDP

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Subjective well-being Subjective well-being

Components of subjective well-being

Components of well-being

“Hedonic”
WELL-BEING Subjective well-being

Affective Cognitive
“Hedonic” “Eudaimonic"
Objective Psychological
well-being Subjective
well-being well-being
Life
Positive Negative satisfaction
affect affect
Health Material well-being
Education Domain Health
Employment satisfactions Productivity
Intimacy
Literacy Safety
Poverty Community
Emotional well-being

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 Subjective well-being Subjective well-being

Subjective well-being: “an umbrella term for the different valuations

people make regarding their lives, the events happening to them, their Happiness: combination of life satisfaction and relative frequency of
bodies and minds, and the circumstances in which they live” positive and negative affect, “satisfaction of desires and goals”,
(Diener, 2005, p. 2) “preponderance of positive over negative affect”, “contentment”,
“consistent, optimistic mood state”

Life satisfaction: global judgments of one’s life and satisfaction with specific
life domains (e.g. work satisfaction), “stable” component in one’s life

Quality of life: “an individual’s perception of their position in life in the

context of the culture and values system in which they live and in relation
to their goals, expectations, standards and concerns” (WHO, 1995)

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Subjective well-being

Bhutan: Gross National Happiness (1972)

GNH indicators: psychological well-being, ecology, health, education, culture,

living standards, time use, community vitality, and good governance

HOW WE MEASURE WELL-BEING

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 Subjective well-being How we measure well-being

Life evaluation from a scale 0 to 10: The Cantril Ladder

Why do we need to measure subjective well-being (SWB)?

1. SWB: legitimate goal of public policy

2. SWB drives objective wellbeing

3. Looking at policy through an SWB lens generates new ideas

From Bhutan to the UK, governments are getting serious about measuring
“happiness” … “subjective wellbeing:” … “flourishing societies”

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How we measure well-being How we measure well-being

Subjective Well-being Homeostasis Theory High subjective well-being has many benefits

“Homeostasis has the goal of defending the affective core of subjective well-
Happy people:
being which is homeostatically protected mood and reflects the set-point – a
person’s genetically-inherited tendency to experience a unique level of felt- ✓ receive more positive evaluations at work
positivity”
✓ are more satisfied with their jobs
✓ handle managerial jobs better
✓ are likely to earn higher incomes compared to those with lower subjective
Scores well-being
• At or above 70 points: normally-functioning homeostatic system ✓ tend to be involved in more activities
✓ are more involved in helping others
• 51-69 points: cannot be clearly interpreted, since may indicate homeostatic ✓ have fewer symptoms of psychopathology
failure of a high set-point or homeostatic normality of a low set-point
✓ are associated with positive social relationships
• Equal to or below 50 points: homeostatic failure ✓ have greater fulfillment in their marriage
✓ report superior health and fewer unpleasant physical symptoms
✓ tend to have higher self-esteem and to view others more positively
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 How we measure well-being

Two main problems of well-being assessments:

• Across countries: Cultural differences might mean that same survey

questions are viewed differently by people from different cultural
backgrounds
GLOBAL DATA ON WELL-BEING
• Across time: Comparisons of happiness measures over time should be
checked especially critically. Questions might be changed and changes of
happiness over time reflect less change of happiness of people and
rather changes of assessment by which happiness is measured

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How we measure well-being How we measure well-being

Population-weighted distributions of happiness, 2012-2015 Population-weighted distributions of happiness, 2012-2015

World Happiness Report, 2016 19 World Happiness Report, 2016 20

 How we measure well-being How we measure well-being

Population-weighted distributions of happiness, 2012-2015 Population-weighted distributions of happiness, 2012-2015

World Happiness Report, 2016 21 World Happiness Report, 2016 22

Global data on well-being Global data on well-being

The geography of happiness, 2016 Global Happiness Report, 2016

Rank Country Happiness Rating Rank Country Happiness Rating

1 Denmark 7.526 13 United States 7.104

2 Switzerland 7.509 16 Germany 6.994

3 Iceland 7.501 18 Belgium 6.292

4 Norway 7.498 23 United Kingdom 6.725

5 Finland 7.413 24 Chile 6.705

6 Canada 7.404 32 France 6.478

7 Netherlands 7.339 37 Spain 6.361

8 New Zealand 7.334 94 Portugal 5.123

9 Australia 7.313 99 Greece 5.033

10 Sweden 7.291 157 Burundi 2.905

World Happiness Report, 2016
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 Global data on well-being

OECD Better Life Initiative, 2016

DATA ON WELL-BEING FOR CHILE

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Data on well-being for Chile Global data on well-being

Current well-being in Chile, 2016 OECD Better Life Initiative, 2016

OECD,
OECD, 2016
2016 27 28
 Global data on well-being Data on well-being for Chile

Life satisfaction in Chile by level, 2011 and 2013

OECD Better Life Initiative, 2016
Completely dissatisfied (1) 1.6
1.3

8.2
Little satisfied (2-4) 6.1

Moderately satisfied (5-6) 27.2

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42.2
Very satisfied (7-9) 44.2

20.8
Completely satisfied (10)
25.4
Chile: 6.1
0 10 20 30 40 50
% of respondents
OECD, 2016
29 CASEN 2011, 2013 2011 30 2013

Data on well-being for Chile Data on well-being for Chile

Life satisfaction in Chile by gender, 2011 and 2013 Life satisfaction in Chile by age, 2011 and 2013

7.8
7.7
7.6 7.6 7.6 7.6
7.6
7.56 Life satisfaction score
7.5
Life satisfaction score

7.4 7.4
7.42 7.4 7.4
7.3 7.3
7.3
7.28 7.2
7.1
7 7 7
7.14 7.1 7

7 6.8
2011 2013 15-24 25-34 35-44 45-54 55-64 65+
Male Female
CASEN 2011, 2013 2011 2013
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CASEN 2011, 2013 32
 Data on well-being for Chile

Proportion of people giving a score higher than 7 re. life satisfaction

according to income decile, 2011 and 2013

2011 2013
i 45.9% 54.1%
ii 51.0% 58.6%
iii 55.3% 63.9%
iv 57.9% 64.1% EASTERLIN PARADOX
v 60.2% 69.6%
vi 65.5% 66.4%
vii 65.1% 71.1%
viii 71.0% 75.4%
ix 76.8% 77.8%
x 81.0% 84.9%
CASEN 2011, 2013 33 34

Easterlin Paradox Easterlin Paradox

Easterlin’s conclusions:
Key concept in happiness economics
1) within a particular society, rich people tend to be much happier that
Paradox: high incomes do correlate with happiness, but long term, poor people
increased income does not correlate with increased happiness
2) rich societies are not happier, or not by much, than poor societies
Easterlin: life satisfaction does rise with average incomes but only up to 3) as countries become richer, they do not get happier
a point, then happiness declines

Angus Deaton and Daniel Kahneman

2010

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 Easterlin Paradox Easterlin Paradox

Reasons behind Easterlin Paradox Adaptation

“Desensitisation to hedonic effects of income”

1) Individuals tend to compare themselves to others and are happier when they
have a higher social and economic status (relative income hypothesis)

2) Gains that concentrate particularly on those at top of income and education

distribution generate inequality, which can enlarge difference between rich
and poor, and lower well-being

3) Personal characteristics, macroeconomic conditions, and general living

conditions can decrease any benefits accrued from higher incomes

4) Income has diminishing marginal utility

5) Adaptation can cause individuals to experience happiness as their income

rises but as they adapt to higher incomes, they adjust to earlier levels

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Determinants of well-being

Seven broad determinants of subjective well-being (SWB)

1. Income

2. Personal characteristics

3. Socially-developed characteristics
DETERMINANTS OF WELL-BEING
4. How we spend our time

5. Attitudes and beliefs towards self/others/life

6. Relationships

7. Economic, social and political environment

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 Determinants of well-being Determinants of well-being

Seven broad determinants of subjective well-being (SWB)

2. Personal characteristics
1. Income
• Age: U-shaped relationship with SWB, with SWB lowest around 35-50
• Absolute income: general increases in income, particularly for high earners,
• Gender: inconclusive, although many studies point to women having lower
are unlikely to increase SWB
SWB
• Relative income: shown to have a significant negative relationship with SWB • Ethnicity: US studies show non-whites to have lower SWB but limited
for people at bottom quintiles evidence for UK

• Wealth: having savings may be positively related to SWB • Physical characteristics: limited evidence

• Debt: evidence that this is associated with low levels of SWB • Genetics: evidence that SWB is partially hereditary

• Personality: evidence that personality has an influence on SWB

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Determinants of well-being Determinants of well-being

Age and life satisfaction Inborn Temperament

“Identical” (Monozygotic) Twins

Identical twins reared apart are much more similar

in happiness than fraternal twins reared together

Heritability: 20-50% of individual differences in happiness

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 Determinants of well-being Determinants of well-being

College entry cheerfulness and income 19 years later Longevity: The nun study
Danner, Snowdon, & Friesen

1. Nuns autobiographies at age 22: Expression of positive emotions

70,000
2. Happy and less happy nuns living in same life circumstances through
60,000 lifespan
50,000
How long do they live?
40,000
Not Cheerful
30,000 Most Cheerful
Survival rate at age: 85 93
20,000
10,000 Most cheerful quartile 79% 52%
0 Least cheerful 54% 18%
Mean

Diener, Nickerson, Lucas, & Sandvik (2002) 45 46

Determinants of well-being Determinants of well-being

Life satisfaction and 100% disability

3. Socially-developed characteristics

• Education: relationship to SWB is indeterminate

• Health: SWB is strongly related to health, particularly psychological health

• Type of work: limited evidence

• Unemployment: highly detrimental to SWB, although effect is moderated by

living close to others who are unemployed

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 Determinants of well-being Determinants of well-being

Unemployment Behavioural economics:

Unemployment, happiness and your partner
7.2

7
Happiest state of affairs You Your partner
6.8
1 Employed Employed
6.6
2 Employed Unemployed
6.4
3 Unemployed Unemployed
6.2
4 Unemployed Employed
6

5.8
Past Prior Yr. Fired 1 Yr. 3 Yrs.
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Hall, J.: Australian Bureau of Statistics 50

Determinants of well-being Determinants of well-being

4. How we spend our time

5. Attitudes and beliefs towards self/others/life
• Hours worked: limited evidence
• Commuting: generally associated with lower levels of life satisfaction and mood
• Attitudes towards our circumstances: may be an important determinant of
• Housework: limited evidence SWB

• Caring for others: those who are informal care givers for long periods have
consistently lower levels of SWB than non-carers • Trust: degree of trust in others seems to be positively correlated with life
satisfaction but evidence is very limited
• Community involvement and volunteering: a positive correlation generally exists
between SWB and participation in the community but certainly not in all studies • Political persuasion: limited evidence
• Sleep: limited evidence
• Religious beliefs: belief in God is associated with higher SWB, other studies
• Exercise: limited evidence showing that atheists are happier
• Religious practice: church attendance is associated with higher SWB, largely
irrespective of particular religion but less religious countries are generally
happier

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 Determinants of well-being Determinants of well-being

Respondents agreeing ‘I am satisfied with my family life’

6. Relationships

• Intimate relationship: being in an intimate relationship (but not necessarily

married) is associated with higher levels of SWB, dissolution of relationship is
detrimental to SWB
Source: Ministry of Social and Family Development, Singapore, 2013
• Seeing family and friends: positively associated with SWB

• Having children: effect is indeterminate

Marital satisfaction through
the family life circle

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Determinants of well-being Conclusion

Subjective well-being
7. Economic, social and political environment

• Income inequality: effect is indeterminate • Affects our outcomes in many aspects of life
• Unemployment rates: limited evidence • Affects our behaviour in many aspects of life
• Inflation: limited evidence • Is a legitimate goal of policy-making
• Welfare and public insurance: limited evidence

• Democracy: limited evidence

• Climate and quality of natural environment: limited evidence

• Security of local environment (crime rates/risk): living in an unsafe area is

associated with lower life satisfaction and mental health
• Urbanisation: some evidence that SWB is lower in more densely populated
areas

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 Conclusion

Subjective well-being

Feelings matter for behaviour and policy

High subjective Low subjective Benjamin Wallace:

wellbeing wellbeing
The price of happiness
High objective wellbeing Wellbeing Dissonance

Low objective wellbeing Adaptation Deprivation

Shawn Achor:

The happy secret to better work

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