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

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

ACKNOWLEDGEMENTS

I express my thanks to Flavio Comim, Ian Gough, Irene van Staveren, and a journal referee for their helpful comments. An earlier version appeared as WeD Working Paper 09, 2004, University of Bath, UK.

Notes

1 In Sen's set of usages, Agency Freedom and Agency Achievement are not part of ‘well-being’. With a broader usage of ‘well-being’, as was introduced earlier, to mean an evaluation of a person's situation or life, then both fall within it as particular types of evaluation. For criticisms of Sen's, in this respect narrow, usage of ‘well-being’, see for example Nussbaum (2000) and Giri (2000).

2 Mixed, multi-dimensional measures, which include both OWB and SWB, are a very different matter, and are common.