Why Measure Subjective Well-being?

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• Why Measure Subjective Well-being?
• Andrew Oswald
• University of Warwick
• I would like to acknowledge that much of this
  work is joint with coauthors Andrew Clark, Nick
  Powdthavee, David G. Blanchflower, Eugenio Proto,
  Alex Weiss, Rainer Winkelmann, and Steve Wu. I
  thank the ESRC for support.

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Reason 1
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Reason 1

• We need to know if society is going in a
  sensible direction.

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Yet in 1934
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Yet in 1934

• ...the welfare of a nation can scarcely be
  inferred from a measure of national income...

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Hug a tree today
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Prof. Simon Kuznets

• The originator of the concept of GDP

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• ...the welfare of a nation can scarcely be
  inferred from a measure of national income...
• S Kuznets

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• So even Simon Kuznets knew that we require a
  different yardstick.

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Reason 2

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Reason 2

• Human beings have feelings.

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Reason 2

• Human beings have feelings.

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• Humans have feelings, and feelings matter.

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• How do I know researchers care about feelings
  of well-being?

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• Say we do an electronic search.

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• Since 2008, approximately 110,000 articles
  have been published in economics journals.

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The most-cited major article in modern
economics
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The most-cited major article in modern
economics

• Relative income, happiness, and utility An
  explanation for the Easterlin paradox and other
  puzzles
• Clark, Andrew E. Frijters, Paul Shields,
  Michael A.
• JOURNAL OF ECONOMIC LITERATURE MAR 2008

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Reason 3

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Reason 3

• Peoples utility depends on income relative
  to comparison income.
• Veblen, Scitovsky, Hirsch, Frank...

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Much econometric evidence
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Much econometric evidence

• Clark and Oswald Satisfaction and Comparison
  Income. Journal of Public Economics 1996
• Luttmer Neighbors as Negatives. Quarterly
  Journal of Economics 2005

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• There is other evidence that human beings care
  about their relative position.

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• We are now able to see that inside the brain.

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• Title Social comparison affects reward-related
  brain activity in the human ventral striatum
  Author(s) Fliessbach K, Weber B, Trautner P, et
  al.Source SCIENCE Volume 318 Issue 5854
  Pages 1305-1308 Published NOV 23 2007

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Armin Falk et al

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Armin Falk et al

• While being scanned in adjacent MRI scanners,
  pairs of subjects had to perform a task with
  monetary rewards for correct answers.

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• Variation in the comparison subject's payment
  affected blood oxygenation level-dependent (BOLD)
  responses in the ventral striatum.

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• Variation in the comparison subject's payment
  affected blood oxygenation level-dependent (BOLD)
  responses in the ventral striatum. This brain
  region is engaged in the registration of primary
  rewards.

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Falk et al in Science
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Falk et al in Science

• The mere fact of outperforming the other subject
  positively affected reward-related brain areas.

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Blood-oxygenation equations

• (similar with fixed effects, main variation
  across Ss)

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So, inside your brain
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So, inside your brain

• You simply want to be high up the monkey pack

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• But then a focus on total national income
  (GDP) misses the point.

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• But then a focus on total national income
  (GDP) misses the point.
• The total amount of relative status is fixed.

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• Say you dont believe in statistical evidence.

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Reason 4
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• Happiness and mental well-being are of
  interest in themselves....

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• .. but, more broadly, there seem to be deep
  scientific links from mind to body.

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• Author(s) Ebrecht M, Hextall J, Kirtley LG,
  Taylor A, Dyson M, Weinman J
• PSYCHONEUROENDOCRINOLOGY    
• Volume 29    Issue 6    Pages
  798-809    Published JUL 2004 

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• Every subject received a standard 4mm-punch
  biopsy, and the healing progress was monitored
  via high-resolution ultrasound scanning.

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• Every subject received a standard 4mm-punch
  biopsy, and the healing progress was monitored
  via high-resolution ultrasound scanning.

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Ebrecht et al 2004

• The overall results showed a significant negative
  correlation between speed of wound healing and
  GHQ scores (r -.59 p lt .01)

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• In other words, happier human beings heal more
  quickly.

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An early, famous paper

• Title PSYCHOLOGICAL STRESS AND SUSCEPTIBILITY TO
  THE COMMON COLD Author(s) COHEN S, TYRRELL DAJ,
  SMITH APSource NEW ENGLAND JOURNAL OF MEDICINE
  Volume 325 Issue 9 Pages 606-612 Published
  AUG 29 1991

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• So we need to understand subjective well-being
  as a determinant of physical health.

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Reason 5
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Reason 5

• The intriguing, and worrying, Easterlin Paradox

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Average Happiness and Real GDP per Capita for
Repeated Cross-sections of Americans.
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• In the early 70s, 33 of Americans described
  their lives as very happy, 52 as pretty happy,
  and 15 as not too happy.
• By the late 2000s, the numbers were 31, 55, 14.

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Typical GHQ mental-strain questions
Have you recently Lost much sleep over
worry? Felt constantly under strain? Felt you
could not overcome your difficulties? Been
feeling unhappy and depressed? Been losing
confidence in yourself? Been thinking of yourself
as a worthless person? Been able to enjoy your
normal day-to-day activities?
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Worsening GHQ levels through time

• Verhaak, P.F.M., Hoeymans, N. and Westert, G.P.
  (2005). Mental health in the Dutch population
  and in general practice 1987-2001, British
  Journal of General Practice.
• Wauterickx, N. and P. Bracke (2005), Unipolar
  depression in the Belgian population - Trends and
  sex differences in an eight-wave sample, Social
  Psychiatry and Psychiatric Epidemiology.
• Sacker, A. and Wiggins, R.D. (2002).
  Age-period-cohort effects on inequalities in
  psychological distress. Psychological Medicine.

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• Economic growth doesnt seem to be making us
  much happier.

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The very latest evidence
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The very latest evidence

• Title China's life satisfaction, 1990-2010
• Easterlin, Richard A. Morgan, Robson Switek,
  Malgorzata et al.
• Source PROCEEDINGS OF THE NATIONAL ACADEMY OF
  SCIENCES OF THE UNITED STATES OF AMERICA  Volume
  109 JUN 19 2012

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Modern Chinas happiness has not risen
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Reason 6
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Innovative recent applications of well-being
research
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Innovative recent applications of well-being
research

• Valuing clean air

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Innovative recent applications of well-being
research

• Valuing clean air
• Valuing different health conditions (migraine)

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Innovative recent applications of well-being
research

• Valuing clean air
• Valuing different health conditions (migraine)
• The power of fruit and vegetables

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Innovative recent applications of well-being
research

• Valuing clean air
• Valuing different health conditions (migraine)
• The power of fruit and vegetables
• The happiness of great apes

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Reason 7
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Reason 7

• There is growing evidence for the objective
  validity of subjective well-being data.

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• Different subjective well-being measures produce
  similar patterns.

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Across nations, hypertension and happiness are
inversely correlated (Blanchflower and Oswald,
2008 Journal of Health Economics)
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• We can exploit neo-classical economic theory
  to show the validity of well-being data.

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Oswald and Wu, 2010 in Science

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Oswald and Wu, 2010 in Science

• Objective confirmation of subjective measures
  of human well-being Evidence from the USA.

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• Think not about people but about places.

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• New data from the Behavioral Risk Factor
  Surveillance System (BRFSS)
• 1.3 million randomly sampled Americans
• 2005 to 2008
• A life-satisfaction equation

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• There is a compensating-differentials literature
  dating back to Adam Smith, Sherwin Rosen,
  Jennifer Roback, etc.
• The most recent is Gabriel et al 2003.

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Gabriel painstakingly takes data on

• Precipitation
• Humidity
• Heating Degree Days
• Cooling Degree Days
• Wind Speed
• Sunshine
• Coast
• Inland Water
• Federal Land
• Visitors to National Parks
• Visitors to State Parks
• Number of hazardous waste sites

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and

• Environmental Regulation Leniency
• Commuting Time
• Violent Crime Rate
• Air Quality-Ozone
• Air Quality-Carbon Monoxide
• Student-teacher ratio
• State and local taxes on property, income and
  sales and other
• State and local expenditures on higher education,
  public welfare, highways, and corrections
• Cost-of-living

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• Then there are 2 ways to measure human
  well-being or utility across space.

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• Then there are 2 ways to measure human
  well-being or utility across space.
• Subjective and objective

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• Gabriels work assigns a 1 to the state with
  the highest imputed quality-of-life, and 50 to
  the state with the lowest.

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• So we need to uncover a negative association
  in order to find a match.

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• And there is one (at gt99 confidence level).

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One Million Americans Life Satisfaction and
Objective Quality-of-Life in 50 States
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• There is a close match between
  life-satisfaction scores and the implied quality
  of life calculated using objective information.
• Oswald-Wu Science 2010

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• There is also growing recognition beyond
  academic researchers

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• Stiglitz Report 2009
• www.stiglitz-sen-fitoussi.fr

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• Statistical offices worldwide should
  incorporate questions to capture peoples life
  evaluations, hedonic experiences

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• Statistical offices worldwide should
  incorporate questions to capture peoples life
  evaluations, hedonic experiences

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Finally
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Finally

• on substantive matters

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What seems to contribute to national well-being?
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• My own judgment of the best current scientific
  evidence

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What makes countries happy
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What makes countries happy

• High social spending as a of GDP

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What makes countries happy

• High social spending as a of GDP
• Unemployment-insurance generosity

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What makes countries happy

• High social spending as a of GDP
• Unemployment-insurance generosity
• Clean air (eg. low SOx emissions)

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What makes countries happy

• High social spending as a of GDP
• Unemployment-insurance generosity
• Clean air (eg. low SOx emissions)
• Low unemployment and inflation

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What makes countries happy

• High social spending as a of GDP
• Unemployment-insurance generosity
• Clean air (eg. low SOx emissions)
• Low unemployment and inflation
• Low crime and corruption

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What makes countries happy

• High social spending as a of GDP
• Unemployment-insurance generosity
• Clean air (eg. low SOx emissions)
• Low unemployment and inflation
• Low crime and corruption
• Openness to trade

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What makes countries happy

• High social spending as a of GDP
• Unemployment-insurance generosity
• Clean air (eg. low SOx emissions)
• Low unemployment and inflation
• Low crime and corruption
• Openness to trade
• Genes

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• Why measure subjective well-being?
• Andrew Oswald
• University of Warwick
• Downloadable research papers at
  www.andrewoswald.com