Objective and Subjective Welfare

Abstract

Trends in basic indicators of objective and subjective welfare (2004–2011) are analyzed in Central Asian countries and compared with the same indicators in Russia and Belarus. Subjective welfare is differentiated according to basic socio-demographic characteristics. A discrepancy between indicators of objective and subjective welfare in the countries of Central Asia is identified: objectively, the economic situation in these countries (with the exception of Kazakhstan) is unfavorable, but at the same time, the level of subjective satisfaction with financial status and life satisfaction levels are high. Possible reasons for this misalignment are discussed. In Russia, Kazakhstan, and Kyrgyzstan, people who have completed higher levels of education are more satisfied with life than those with a secondary education only.

Keywords:

• Belarus
• countries of Central Asia
• household financial status satisfaction
• life satisfaction
• objective welfare
• Russia

Notes

1. When this article was written, the exchange rate was $1.00 to 35 Russian rubles. –Ed.

2. “How would you assess the current material (economic) situation of your family?”

3. The initial value was presented on a scale with the following four gradations: 1—completely satisfied, 2—mostly satisfied, 3—mostly dissatisfied, 4—not at all satisfied. To simplify subsequent interpretation of the results, we recoded the life satisfaction variable to make a higher level of subjective well-being correspond with a higher value on the scale (so that a value of 1, after recoding, means a low level of life satisfaction, while 4 corresponds with the highest level of satisfaction).

4. This indicator is measured on a scale from 1 (a very good material situation for the family) to 5 (a very poor material situation). To simplify interpretation of the results, we recoded the initial value to make a higher level of family material welfare correspond with a higher value on the scale (so that a value of 1, after recoding, means a low rating for welfare, while 5 corresponds with the highest level).

5. “Overall, are you satisfied or dissatisfied with the life you lead?”

6. The Gini coefficient was approximately 0.31–0.33 in Tajikistan and Kyrgyzstan in 2010 and 2011 (Bednost’, 2014).

7. The Gini coefficient in Russia in the same years was 0.417–0.420 (Ovcharova et al., 2014).

8. These indicators were measured on a 10-point scale, with 1 meaning complete dissatisfaction with life overall/household financial situation, and 10 meaning complete satisfaction. The group of respondents who graded their life satisfaction and satisfaction with their household financial situation at 6 or above on a 10-point scale was defined as the category of respondents with the highest level of subjective well-being, which in general corresponds with how the similar category was defined using Eurasian Monitor indicators (respondents who assessed their welfare as “better than average” were included).

9. Average values for subjective welfare of people with a low level of education were not included due to small sample size.