What is subjective well-being and why is it important?

Subjective well-being is a measure of individual welfare that combines measures of life satisfaction and happiness. Subjective measures of well-being can account for non-quantifiable determinants of well-being. Therefore, in some instances, subjective well-being data may provide a superior alternative to traditional measures of well-being. Considering subjective well-being data when evaluating social policies will paint a more complete picture of policy success. Sajid Sherif

February 11, 2020

Widespread inequality is ubiquitous in South Africa. More than just reducing the income and wealth gap, there is increasing pressure on government to provide effective service delivery and redress inequalities of the past (Higgs, 2007). The South African government also places immense importance on social cohesion as it is believed that the only way forward from South Africa’s dark past is to instil feelings of belonging and trust (Higgs, 2007). But how do we measure how the country is progressing against such important social objectives? Subjective well-being (SWB) data provides a means to evaluate the effectiveness of economic and social policies (Frey and Stutzer, 2002; Hinks and Gruen, 2007). The purpose of this blog is to define and describe SWB, and to consider how this concept may be used for the purpose of policy evaluations.

SWB is an individual measure of welfare that may combine elements of life satisfaction and happiness. Life satisfaction is a holistic evaluation of an individual’s life circumstance that considers family life, social relationships, job satisfaction, health status and income; while happiness is defined as an individual’s state of being, the culmination of an ongoing appraisal of and reaction to experiences influenced by pleasant and unpleasant occurrences (Bookwalter and Dalenber, 2004; Diener, 1994; Higgs, 2007; Roemer, 2010; Vila, 2005).

According to Diener (1994), life satisfaction is an enduring, all-encompassing assessment of life while happiness is a continuous and sometimes myopic evaluation. Everyday events influence happiness but do not affect life satisfaction, unless such events alter life circumstances (Hinks and Gruen, 2007). Due to the holistic nature of life satisfaction, it can be thought of as a stock that accumulates over time. Conversely, happiness exhibits flow characteristics because it reflects an ongoing appraisal of and reaction to everyday events, thus subject to a greater degree of fluctuation than life satisfaction (Roemer, 2010). Although many researchers use both life satisfaction and happiness as measures of SWB, Hinks and Gruen (2007) and Roemer (2010) view life satisfaction as a more stable and reliable assessment of SWB.

Recent studies, both internationally and within South Africa, commonly measure SWB by asking survey respondents to rate their overall happiness and/or satisfaction with life as a whole on a Likert scale (Kannemeyer, 2016; Pokimica et al., 2012). A theme common to the well-being literature is that subjective measures of well-being are preferred over objective measures (Krause, 2003; Michalos, 2008). Subjective measures of well-being – such as respondents’ perceived household income relative to other households in their community – have demonstrated greater validity than objective measures in gauging social welfare because they enable non-quantifiable social aspects of life to be assessed consistently with economic outcomes (Frey and Stutzer, 2002; Helliwell and Barrington-Leigh, 2010). Although objective (‘hard’) measures of well-being such as income are relevant, it is rather how individuals perceive these determinants that has demonstrated greater validity to the concept of individual well-being (Posel and Casale, 2011).

It is for this reason that economists are increasingly making use of SWB data to understand individual behaviour so as to predict the social welfare outcomes of policies (Kannemeyer, 2016). However, the usefulness that academics find in assessing outcomes using SWB has not translated to the evaluation of policy effectiveness in South Africa. Given that, since the advent of democracy, well-being has been at the centre of policymaking, the use of alternate outcome measures will paint a more complete picture regarding policy success.

REFERENCES

Bookwalter, J.T. and Dalenberg, D. (2004). Well-Being and Household Factors in South Africa. Social Indicators Research, 65(3), 333-353.

Diener, E. (1994). Assessing Subjective Well-Being: Progress and Opportunities. Social Indicators Research, 31(2), 103-157.

Frey, B.S. and Stutzer, A. (2002). What Can Economists Learn from Happiness Research? American Economic Association, 40(2), 402-435.

Helliwell, J.F. and Barrington-Leigh, C.P. (2010). Measuring and Understanding Subjective Well- Being. The Canadian Journal of Economics, 43(3), 729-753.

Higgs, N.T. (2007). Measuring and Understanding the Well-Being of South Africans: Everyday Quality of Life in South Africa. Social Indicators Research, 81(2), 331-356.

Hinks, T. and Gruen, C. (2007). What is the Structure of South Africa’s Happiness Equation? Evidence from Quality of Life Surveys. Social Indicators Research, 82(2), 311-336.

Kannemeyer, C. (2016). Subjective well-being: Adult South Africans’ Life Satisfaction (2008 – 2014). Cape Town: SALDRU, University of Cape Town. SALDRU Working Paper Number 177/ NIDS Discussion Paper 2016/4.

Michalos, A.C. (2008). Education, Happiness and Wellbeing. Social Indicators Research, 87(3), 347- 366.

Pokimica, J., Addai, I. and Takyi, B.K. (2012). Religion and Subjective Well-Being in Ghana. Social Indicators Research, 106(1), 61-79.

Posel, D.R. and Casale, D.M. (2011). Relative Standing and Subjective Well-Being in South Africa: The Role of Perceptions. Social Indicators Research, 104(2), 195-223.

Roemer, M.K. (2010). Religion and Subjective Well-Being in Japan. Review of Religious Research, 51(4), 411-427.

Vila, L.E. (2005). The Outcome of Investment in Education and People’s Well-Being. European Journal of Education, 40(1), 3-11.