Developments in the Measurement of Subjective Well-Being

TLDR

Subjective well‑being reports can inform consumer preference and welfare measurement if conducted credibly, capturing individuals’ perceived experiences rather than economists’ utility concepts and yielding more accurate insights when reported close to the actual experience. The paper investigates whether subjective surveys can approximate well‑being, examines how responses vary with circumstances, and proposes the U‑index, a misery metric that records the proportion of time people experience unpleasant states without requiring cardinal utility. The authors argue for distinguishing multiple conceptions of utility and introduce the U‑index, a non‑cardinal misery metric that captures the proportion of time individuals experience unpleasant states. They conclude that the U‑index effectively measures well‑being by quantifying time spent in unpleasant states without needing cardinal utility.

Abstract

Direct reports of subjective well-being may have a useful role in the measurement of consumer preferences and social welfare, if they can be done in a credible way. Can well-being be measured by a subjective survey, even approximately? In this paper, we discuss research on how individuals' responses to subjective well-being questions vary with their circumstances and other factors. We will argue that it is fruitful to distinguish among different conceptions of utility rather than presume to measure a single, unifying concept that motivates all human choices and registers all relevant feelings and experiences. While various measures of well-being are useful for some purposes, it is important to recognize that subjective well-being measures features of individuals' perceptions of their experiences, not their utility as economists typically conceive of it. Those perceptions are a more accurate gauge of actual feelings if they are reported closer to the time of, and in direct reference to, the actual experience. We conclude by proposing the U-index, a misery index of sorts, which measures the proportion of time that people spend in an unpleasant state, and has the virtue of not requiring a cardinal conception of individuals' feelings.