Academic journal article Review of Social Economy

Subjective and Objective Well-Being in Relation to Economic Inputs: Puzzles and Responses

Academic journal article Review of Social Economy

Subjective and Objective Well-Being in Relation to Economic Inputs: Puzzles and Responses

Article excerpt

Abstract Systematic, large discrepancies exist between direct measures of well-being and the measures that economists largely concentrate on, notably income. The paper assesses and rejects claims that income is satisfactorily correlated with well-being, and addresses the implications of discrepancies between income measures and measures of subjective well-being (SWB) and objective well-being (OWB) and also between subjective and objective well-being measures themselves. It discusses a range of possible responses to the discrepancies: for example, examination of the specifications used for income, SWB and OWB, and looking for other causal factors and at their possible competitive relations with economic inputs to well-being. It rejects responses that ignore the discrepancies or drastically downgrade their significance by adopting a well-being conception that ignores both SWB and OWB arguments (e.g.: by a claim that all that matters is choice or being active). It concludes that the projects of Sen and others to build syntheses of the relevant responses require further attention.

Keywords: subjective well-being, objective well-being, well-being, Easterlin paradox, capability approach


I want to address the systematic and large discrepancies between direct well-being measures and the measures that economists largely concentrate on; for example the discrepancies between subjective well-being and income. I will primarily consider the significance and implications of such discrepancies and the range of possible responses. Amongst such responses, much economics has continued to focus overwhelmingly on income and expenditure, and I will consider some ways that it has managed to do so. To answer why economics has followed that questionable route requires another study.

In the first section we look at the allocation of attention across the various measures. The second section explores the issue of discrepancy between income measures and well-being measures, with special reference to subjective well-being (SWB). The third section rejects claims that income is satisfactorily correlated with well-being measures; the claims seem to misread the socio-economic significance of the many regression exercises that find weak even if statistically significant linkages, especially between income and SWB. The fourth section further clears the way, by deepening the conceptualization of well-being. The fifth section is then able to investigate a series of responses to the discrepancies, including some evasions or arguments that SWB is of little importance and that choice is what matters--having a choice, having more choice, getting one's choice--or else simply being active.

The terms SWB and, its partner, 'objective well-being' (OWB) have to be used with care. They refer here not to methods of measurement (self-report or non self-report), but to what is measured: whether feelings or non-feelings. The two labels are not perfect--for example, the concept of OWB is not value-free but depends on what aspects of be-ing are considered as of value, while much research in recent decades indicates that SWB can be reliably, satisfactorily measured (e.g. Kahneman et al. 1999)--but they are well-established and hence used here.


Figure 1 presents a narrative sequence, from bottom to top: from resources through choices and activities to felt satisfaction and value fulfillment. The narrative is a proposed, incomplete, descriptive and explanatory framework; it does not imply that the level or levels with normative priority must be the final one or ones. It elaborates the chain of categories in Sen's capability approach (e.g. Sen 1984, 1985), which in turn elaborated the standard chain in micro-economics. The table divides the sequence into three domains: monetized inputs, intermediate events and conditions, and psychic outcomes. It tries in this way to compare the areas of attention in diverse disciplinary literatures. …

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