Global Development and Happiness: How Can Data on Subjective Well-Being Inform Development Theory and Practice?

Abstract

While research on subjective well-being (SWB) has recently attracted much attention in richer nations, its potential in a development context remains underexploited. This paper, therefore, considers conventional development theory through an SWB lens. The Human Development approach with its three key elements of material conditions, health and education is re-assessed by examining to what extent these factors actually matter for people's life satisfaction in different nations. Using data from the World Values Survey for 100 000 people from 70 nations, considerable heterogeneity is identified and a new country ranking in the form of an SWB-adjusted Human Development Index, or ‘Happy Development Index’, is devised.

Thanks to Adalbert Wilhelm for helpful statistical advice, as well as to J. Allister McGregor, John Helliwell and Lant Pritchett for their valuable suggestions.

This research was funded by the Excellence Initiative of the German Research Foundation and the Council of Science and Humanities through a grant provided by the Bremen International Graduate School of Social Sciences.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

¹ The terms SWB, life satisfaction and happiness are used synonymously in this paper, in line with the majority of the literature on this topic. There are certain conceptual differences whose description would go beyond the scope of this paper. In short, and as a justification of the response variable selected in the empirical analysis of this paper, an approach in line with Helliwell and Putnam (2004, p. 1438) is chosen, namely that “the ‘life satisfaction’ measure seems marginally better than the ‘happiness’ measure for our purposes of estimating the effects of relatively stable features.”

² Social capital was measured in the study following the classification of structural social capital (i.e. membership or participation in associations), cognitive social capital (i.e. generalised trust) and linking social capital (trust in institutions).

³ In an alternative regression, the income variable was replaced by log income, and age square was added, as this is often done in the literature. The model using those alternatives had a lower R² than the one displayed in the paper, though, and was therefore not given preference. Results are available upon request.

⁴ More information is available from www.worldvaluessurvey.org

⁵ N.B. Due to data restrictions, a small number of country regressions are missing certain control variables: Colombia (religiosity, number of children), USA (number of children) and New Zealand (unemployed). It was decided that the small likelihood of distorting the main coefficients of interest by omitting these control variables would not justify excluding these countries altogether.

⁶ It must be noted that countries with a higher income-SWB correlation may not just be more materialistic but they could also have a less good social welfare system and public goods, and thus people need more individual income to cover those goods. Also, one reason for a higher income-SWB correlation is not necessarily materialism, but simply the agency that income gives people to make choices and to live the kinds of lives that they want to lead. Recent research by Kahneman and Deaton (2010) and Graham and Nikolova (2013), which examines the differences in the income-SWB correlation depending on whether evaluative versus hedonic well-being is being measured, is suggestive of this.

⁷ It must be emphasised that there is no official connection, authorisation or endorsement of the official HDI as published by UNDP with regard to the calculations made here. The term “SWB-HDI” simply refers to the properties of the ranking made here as combining data from the HDI and data on SWB.

⁸ The t-statistics are displayed in the full data table in Appendix (see Appendix, columns numbered 6–8).

¹¹ Considering only countries for which WVS data exist.

¹² Considering only countries for which WVS data exist.

⁹ In fact, when looking at the isolated gross effect of education by not controlling for income, for instance, the coefficient for education in the global sample becomes moderately positive (see Appendix).

¹⁰ Incentive structures mean that achieving a goal is generally considered as desirable and rewarding in a society for whatever reason, whether in principle and for its own sake or because it is additionally associated with higher SWB.