Subjective well-being

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Angus Deaton writes,

The measure I use is an evaluative measure of well-being that asks people to report, on an eleven-point scale, from 0 to 10, how their life is going. The question is originally due to Cantril (1965), and is asked in exactly the same way of all individuals sampled by Gallup in their World Poll. The question is “Please imagine a ladder, with steps numbered from 0 at the bottom to 10 at the top. The top of the ladder represents the best possible life for you and the bottom of the ladder represents the worst possible life for you. On which step of the ladder would you say you personally stand at this time?” There is no mention of happiness, so the ladder is explicitly not a hedonic measure that enquires into momentary mood or feelings. Rather it asks people to assess how their life is going “at this time,” an answer to which requires cognitive effort by the respondent, and which is a more considered assessment of well-being than trying to weight together or average the host of emotions and feelings that make up the evanescent texture of everyday life. In the surveys I use here, the Cantril ladder question is immediately followed by a question identical to the ladder question but with the last sentence replace by, “Just your best guess, on which step do you think you will stand in the future, say about five years from now?” I shall use this question too.

I think that as intangible goods and services become increasingly important, economists are going to have to resort to subjective measures. This means that, like Deaton, we will have to think carefully about how we take those measurements.

8 thoughts on “Subjective well-being”

  1. Yep. But I have serious doubts about measures of subjective well-being like this one. For example, some researchers have noted that the numbers seem to stop rising much with increased wealth (from which some conclude that there’s not much point to more wealth and economic growth beyond middle-income country standards). But of course the increases slow down — they have to. That’s just an artifact of there being only 10 rungs on the ladder. There’s no more room to climb.

    I’d rather see something like:

    Imagine a ladder starting from the ground and going up to the height of Mt Everest. Imagine that the top rung represents the best possible life achieved by a human being at any time in history (including the future). Now, where on the ladder was the average person 1000 years ago? 100 years ago? 25 years ago? Where are you now? Where do you expect to be in 10 years? Where do you expect your children to be at your age? Your grandchildren? People 100 or 1000 years from now?

      • You’re not going to be climbing to the top. But the next step up will always be available.

  2. One has to be careful not to be tricked by quality, which can lead to more aggregate inputs relative to actual aggregate output, in non tradable sectors. When the costs of quality goods and services lead to greater aggregate input overall, quality of life can begin to decline for lower income levels. When more of our time is demanded for non tradable product than we would choose, we might also be less “happy”.

  3. The more educated a person is, the more aware he is of his own ignorance. For example, an educated person might not know any more about how to create artificial intelligence software than an uneducated person, but she would at least know that such a thing exists.

    Likewise a wealthy person might be more aware of how wealth can enhance one’s life than is a poor person. If so, a wealthy person might place herself lower on the ladder than might be expected.

  4. I think that as intangible goods and services become increasingly important, economists are going to have to resort to subjective measures. This means that, like Deaton, we will have to think carefully about how we take those measurements.

    This strikes me as equivalent to saying that modern technology is making humans less legible to centralized authorities (in a semi-James Scott manner). But that seems to me to be definitely wrong. Will I grant that results from technology produce more changes to well being that aren’t tracked by traditional GDP measurements? Certainly, but that doesn’t mean authorities aren’t able to use newer and more effective means of categorizing and assessing people. Facebook’s famous mood experiment (http://www.pnas.org/content/111/24/8788) is a prime example. China using modern tech to create scores for citizenship is another. Perhaps some might think these things don’t exactly measure the internal states of people, but I think that might be a bias from those who tend towards thinking professions/hobbies and who subsequently overemphasize the specialness of internal thoughts.

    Now, maybe academics will lag behind governments and businesses in realizing the modern economy actually answers questions regarding people’s subjective experiences better than their old measures did. I would expect that from the above bias and also because they lack skin in the game (to apply that fantastic Talebian phrase). But the organizations that matter are already going way beyond what survey data tells you.

  5. I am guessing the subjective well-being of the 1950 – 1980 was historically high because:

    1) How much of it was We Survived The Depression and WW2 reality? People today don’t compare themselves to 1932 or 1942 anymore. So any trend compare to these past years has a huge self-selection problem. How many I Love Lucy episodes were about getting a new TV? Big deal stuff in 1953. I suspect that is the main reason why Chinese people are satisfied with their government, society, and economy in general. A lot of people survived the Mao years and/or subsistence farming.

    2) One aspect I find interesting is the Hispanic-Americans in Southern California talk a lot like my Great Grandparents did in the 1980s. Their reality was different than Middle Class America.

    3) Again the strangest reality today is the areas and people most struggling today are not minorities but areas that were doing better 20 – 40 years.

  6. Intangible means unpriceable, a challenge.

    We need incentives, something that moves this inside knowledge to some entities that queue up. Like an auto algoriths that takes a network of human capital and warps that network into a profit center, making ownership tangible. Like an intelligent facebook where human capital can exchange value and to buy access is to buy shares..

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