Consumption or income, valued at prevailing market prices, is the workhorse metric of human welfare in economic analysis; poverty is almost universally defined in these terms, and the growth of national economies measured as such. Yet for almost as long as economic analysis has utilized these measures, various shortcomings have been noted in the ability of these constructs to comprehensively capture welfare. One example – these measures can’t fully account for access to non-market goods. More famously, with Amartya Sen’s emphasis on human functionings and capabilities, these measures may not fully capture an individual’s ability to achieve and exhibit agency.
In part inspired by this view that people intrinsically value capabilities and functionings as opposed to money-metric measures per se, a burgeoning sub-field of poverty research has proposed various measures of subjective, or self-reported, well-being (SWB). SWB is widely seen as multi-dimensional and unable to be captured in only one question. Hence there are numerous approaches to the measure of SWB, most notably combinations of evaluative/cognitive approaches, such those that inquire about life satisfaction, and hedonic/affective approaches such as those asking about happiness.
I think it’s uncontroversial if I claim that the field of economics is of mixed minds about the usefulness of SWB: these measures hold some promise for comprehensive welfare assessment yet there are various interpretive challenges. I’ve blogged about some of these challenges in the past. Most concerning is the worry that salient characteristics such as gender and education, which naturally vary in any population, influence how SWB questions are understood and reported, thus complicating cross-group comparisons. Now two recent papers have made advances in the field and, taken together, highlight both the pitfalls and the promise of SWB.