National WellBeing Indices
Professor Liam Delaney
“Not fluffy”
Overview
Well-Being and Economics
Concepts of Well-Being
20th Century Ireland
National Well-Being Indices
Considerations and Limitations
2 - Historical Background (1)
 Schumpeter (1953) traces utility theory
from Aristotle through the medieval
scholastics through to Smith, Bernoulli,
Walras (rarete), Jennings and Lyod.
 Jevons: “Economics as a calculus of
pleasure and pain”. Marshall: “Hedonics”.
 Generally assumed that utility was linear
but this was not always the case and
began to be relaxed.
 Very strong European interest at the turn
of the 20th century in integrating newly
emerging psychological theories in to
economics particularly psychophysics (e.g.
Fechner).
Historical Background (2)
 Strong interest in issues such as the
interpersonal comparison of utility particularly
with regard to progressive taxation.
 However, became gradually apparent that what
was taking place was a logic of utility rather
than a psychology of utility.
 Friedman (1952) and other work e.g.
Samuelson put a number of nails in the coffin of
directly analysing utility.
 Many of the issues did survive as critiques of
welfare economics. Ng (2003), Harsanyi (1997)
Modern Hedonic Economics
 The quantitative analysis of measured hedonic
experience has a long past.
 Has recently been “discovered” by economics.
 Strongly associated with the work of Kahneman,
Frey, VanPraag, Clark, Blanchflower, Oswald and
others.
 Review by Layard (2005).
 See Van-Praag and Ferrer-I-Carbonell (2004) for a
more Euro-centric perspective.
 Strong links with Psychology and Neuroscience.
(Glimshcer and Rustichini 2004).
Well-being and Economics
Historical concern with utility
Modern debate
Easterlin Paradox
Well-Being functions
Loss Aversion
Benefits of GDP/GNP
Comparable
Linked to core economic parameters
Okun's law
Debt Dynamics
Limitations of GDP/GNP
Household Production
Inequality
Public Goods/Externalities
Non-Market Goods
Environmental sustainability
Consumption and PPP
Concepts of Well-being
Consumption and Income
Happiness
Life Satisfaction
Flow measures of Utility
Functioning
Eudemonia
Capabilities
Flow Measures of Well-Being
Stress:-Public Transport V
Driving http://www.stressmapping.com/
Red=
driving
Green=
Public
Transport
Liam Delaney, Michael Daly, Gerard O Neill
Fogel on Development of Societies
Stage 1: Death is linked to an endemic
shortage and uncertainty of food
Stage 2: Prevention of death from
infectious illness becomes key
Stage 3: Increasing control over acute
causes of death and increasing life
expectancies and medical
advancements
Transitions between stages
20th-Century Ireland
5 major collapses
Declines in infant mortality in 40s
Increases in Life Expectancy
High out-migration
High variances in childhood conditions
Current trough following boom
Source O’Grada 2010
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
Irish Infant Mortality
90
80
70
60
50
40
Rate per 1000
30
20
10
0
Life Expectancy in Ireland
Mean scores on psychological distress
index (1994-2001)
Suicide rates per 100,000 by gender
Male suicide rates by age group
Determinants of Well-being
Unemployment
Childhood mistreatment
Social isolation
Chronic Pain
Relationship
Fixed effects
Income
Income
Huge historical debate
Easterlin Paradox
Wolfers and Stevenson
Easterlin and Angelescu
Diminishing Returns?
Intertemporal Factors
Intergenerational Welfare
Childhood determinants of well-being
Scarring effects
Disruptive life events
Chain effects
Evaluable or Inherently Inevaluable
Hsee (2008)
One solution to Easterin Paradox
Inherently Evaluable Goods relate to
core well-being
Consistent with increased happiness
between rich and poor and why rich do
not get happier over time
Not just limited to poor countries
Inherently Evaluable Goods
 “Inherently evaluable attributes are those for which
we have an innate, typically visceral and biological
scales to judge desirability. Examples include the
amount of sleep, severity of pain or allergies, stress
from work, ambient temperature, degree of social
isolation (loneliness), etc., In contrast, inherently
inevaluable attributes are those for which we do not
have an innate evaluation scale to assess
desirability – to evaluate these attributes, we must
instead rely on external reference information or
socially learned norms. Examples include the size of
a diamond, the amount of income…”
(Hsee et al 2008, p 228).
Macro-Considerations
Inflation less aversive than
unemployment
Inequality
Financial Crises
Less known about balance sheets
Irish Literature
Newman, Delaney, Nolan (2008):
increases in financial satisfaction
through Celtic Tiger
Delaney et al (2008): determinants of
WHO-5
ESRI - The Best of Times
Delaney (2009): well-being through
late 20th century Ireland
Walsh (2012): well-being after the fall
National Well-being indices
GDP/GNP
Stiglitz-Sen Commission
Life Satisfaction Rankings
Happiness Rankings
OECD Better Life
Human Development Index
Gallup
ONS
Stiglitz-Sen Recommendations
Income/Consumption rather than
production
Households
Wealth and distribution
Subjective dimensions
Inequalities
Surveys to assess linkages
Role of statistical offices
Ireland in Well-Being Indices
Highly ranked on GDP/GNP
Life expectancy convergence though
with long lags
Consistently among highest in wellbeing and life satisfaction
7th in Human Development Index
Overall Mean Happiness for the Year 2002 - 2010
Iceland
Denmark
Finland
Switzerland
Norway
Sweden
Luxembourg
Ireland
Belgium
Netherlands
Cyprus
Spain
Austria
United Kingdom
Israel
Slovenia
Germany
France
Poland
Croatia
Czech Republic
Estonia
Portugal
Greece
Slovakia
Italy
Latvia
Hungary
Romania
Russian Federation
Turkey
Ukraine
Bulgaria
8.47
8.32
8.02
8.02
7.94
7.87
7.83
7.79
7.73
7.73
7.57
7.53
7.50
7.44
7.42
7.17
7.15
7.15
6.89
6.81
6.75
6.65
6.55
6.49
6.48
6.46
6.41
6.26
6.09
6.03
6.01
5.48
5.32
0
.5
1
1.5
2
2.5
3
3.5
4
4.5
5
5.5
mean of happiness
6
6.5
7
7.5
8
8.5
9
Overall Mean Life Satisfaction for the Year 2002 - 2010
Iceland
Denmark
Switzerland
Finland
Sweden
Luxembourg
Norway
Netherlands
Austria
Ireland
Belgium
Spain
Cyprus
Israel
United Kingdom
Slovenia
Italy
Germany
Poland
Croatia
Czech Republic
France
Estonia
Greece
Romania
Slovakia
Turkey
Latvia
Portugal
Hungary
Russian Federation
Bulgaria
Ukraine
8.46
8.45
8.01
7.96
7.85
7.81
7.80
7.58
7.50
7.46
7.42
7.24
7.19
7.08
7.06
6.87
6.86
6.84
6.50
6.45
6.40
6.30
6.24
6.10
6.06
6.04
5.89
5.88
5.67
5.55
5.40
4.58
4.24
0
.5
1
1.5
2
2.5
3
3.5
4
4.5
5
5.5
6
mean of lifesatisfaction
6.5
7
7.5
8
8.5
9
Mean-levels of well-being across countries
Subjective Well-Being By Country
DK
IE
CH
NO
LU
IS
SE
BE
ES
NL
FR
AT
DE
PL
FI
SI
CZ
SK
GR
GB
PT
HU
EE
UA
DK
IE
CH
NO
LU
IS
SE
BE
ES
NL
FR
AT
DE
PL
FI
SI
CZ
SK
GR
GB
PT
HU
EE
UA
0
5
10
mean of who5
15
Source: Delaney et al 2009
20
Gallup Index
When sorted according to the
percentage of inhabitants who are
'thriving', Ireland comes 10th out of 40,
Behind Denmark, Finland, Norway,
Sweden, Netherlands, Switzerland,
Austria, Belgium and the United
Kingdom.
In Ireland, 49% are thriving, 49% are
struggling, 2% are suffering, and the
score for daily experience is 7.5
UN Happiness Report
Using the Gallup World Poll (Cantril
ladder)
 Annual samples of 1,000 respondents in more than
150 countries. Respondents evaluate their quality
life on an 11-point ladder scale (Cantril ladder).
 The report gathers the responses from Gallup World
Polls, from 2005 to 2011, and weights them by
each country’s population. Ireland comes 10th in
the world based on this measure.
Happy Index
 Country rankings based on the 4-point evaluative
happiness answers in the combined World Values
Survey/European Values Survey
 Ireland comes sixth on this combined measure.
Average happiness yesterday
 Average Gallup World Poll answers to a question
asking about the respondent’s happiness yesterday
(using a yes/no 2-point response scale).
 Ireland comes first on this measure.
Positive affect
 Gallup World Poll country rankings for positive
affect (the average of yes/no answers on
the frequency yesterday of enjoyment, happiness
and laughter).
 Ireland comes second on this measure.
Negative affect
 Gallup World Poll country rankings for negative
affect (the average of yes/no answers on
the frequency of worry, sadness, anger and
depression).
 Ireland is ranked number 27 on this.
Average net affect
 positive affect minus negative affect
 Ireland is ranked 3rd on this.
OECD Better Life Index: Ireland
(indicators)
 Housing expenditure: 4/36
 Dwelling with basic facilities: 99.80% = 10/36
 Rooms per person: 2.1 = 5/36
 Household financial wealth: 21485 USD = 22/36
 Household net adjusted disposable income: 24156
USD = 16/36
 Job security: 10/36
 Long-term unemployment rate: 6.69% = 33/36
 Employment rate: 60% = 26/36
 Quality of support network: 98% = 2/36
 Years in education: 17.6 = 17/36
OECD Better Life Index: Ireland
(indicators)
 Student skills: 18/36
 Educational attainment (% aged 25 to 64 having
completed secondary school): 72% = 24/36
 Water quality: 89% satisfied = 14/36
 Air pollution: 13 micrograms = 3/36
 Consultation on rule-making: 9/36
 Voter turnout: 67% = 22/36
 Self-reported health: 83% good or v.good = 6/36
 Life expectancy: 81 years = 11/36
 Life satisfaction: 17/36
OECD Better Life Index: Ireland
(indicators)
 Homicide rate: 1.2 homicides per 100,000 people =
15/36
 Assault rate: 2.63% = 10/36
 Time devoted to leisure and personal care: 14.56
hours = 24/36
 Employees working very long hours: 3.72% =
10/36
After the Fall
Set of papers by Brendan Walsh
Evidence for increase in suicide rates
Small change in life satisfaction
Increase in births
Decrease in mortality
Increase in migration
Source Walsh 2011
Source Walsh 2011
Considerations 1
Multi-dimensionality
Differential item functioning
Migration and Well-Being
Means and Variances
Rawlsian Well-Being functions
Quantile Regressions
Migration
Source: Delaney et al 2013 in press
Heterogeneous reporting
 Analyses of socioeconomic inequities in adult health often
rely on self-reported indicators, usually some variant of:
In general, would you say that your health is:
Very good, Good, Fair, Poor, Very poor

Subjective scales involve evaluation of your own true
health compared with your own subjective view of what it
means to be above or below a given threshold (such as
very good and good)
 Response categories may be interpreted in systematically different ways
 If there are systematic differences in how different groups of
people interpret responses categories then results using these
responses may be biased
58
Response Category Cut-point
Shift
Very good
Good
Moderate
Bad
Very bad
True Health
Response Scale
A
B
C
59
Heterogeneous health
reporting
5-category SAH instrument
 “True” health status for each individual, which is unobserved,
represented on a vertical axis with higher points, represented by the
red lines, indicating better health
The ranges of true health within which different responses
are given to the SAH question vary across individuals (A, B
& C)
 Relative to A, B is more positive and C more negative regarding
their health
 At the top level of “true” health (top red line) A reports good health,
B very good and C moderate
 At the middle level of true health, A reports moderate health, B
good and C bad
 At the lowest level of true health, A reports bad health, B moderate
and C very bad
B is much more optimistic than A or C
60
Incomparable Responses Problem
 Individuals may report health differently depending
their upon
 Different understandings or conceptions of health
 Expectations for own health
 Their health relative to their peers
 Different norms or standards as to what the responses
categories mean
 Financial incentives to report ill health
 This is referred to as differential item functioning or DIF
61
Consequences of DIF for equity
analyses and indices
 If the variation is random, it will not bias the measurement of
socioeconomic-related health inequality
 Differential reporting of health by socioeconomic status (SES)
would bias estimation of the gradient
 E.g. if the poor systematically understate their true health status,
then self-reported measures of health will not reflect the full extent
of health inequalities


For the same ‘true’ (but unobserved) health status, poor may
report better health
Differences in health disparities from self-reported and
objective health measures suggest systematic variation in
reporting
62
Evidence of heterogeneous
reporting
 Income-related inequalities in objective health indicators
(malnutrition, mortality), tend to be higher than those in
subjective health
 Discrepancy in health gradients measured by objective
and subjective indicators is even more common in
developing world

For example, in developing countries, gradient in reported
health often much smaller than gradient in
mortality/anthropometrics
 Aboriginals self-report better health despite being
seriously disadvantaged on objective measures such as
mortality
63
Examples
India:
Amartya Sen (2002): “the state of Kerala has the highest
levels of literacy... and longevity... in India. But it also has,
by a very wide margin, the highest rate of reported
morbidity among all Indian states...
At the other extreme, states with low longevity, with woeful
medical and educational facilities, such as Bihar, have the
lowest rates of reported morbidity in India.”
64
Methodology: Anchoring Vignettes
 King et al. (2004) proposed anchoring
vignettes as a method overcoming the problem of
incomparable responses
 How - uses respondent’s evaluations of the health states
of hypothetical people described in a short vignettes as
an anchor for their self-assessed responses (King et al.
2006, Kapteyn et al 2007, van Soest 2007)
 Purges these reporting differences from
individuals’ evaluations of their own health
65
Methodology: Anchoring Vignettes
1. Respondents are first asked to evaluate their health in a
given domain on a subjective scale. For example:
 In the last 30 days, how much of a problem did you have because of shortness of
breath?
 None, Mild, Moderate, Severe, Extreme
2. Respondents are then asked to rate the health of one or
more hypothetical person described in the vignette on the same
scale that they used to rate their own position. For example:
 Vignette A: Marie has no problems with walking slowly. She gets out of breath easily
when climbing uphill for 20 meters or a flight of stairs.
In the last 30 days, how much of a problem did Marie have because of shortness of
breath?
 Vignette B: Sean has asthma. He enjoys playing football twice or three
times per week. He has attacks of wheezing once a month that go away
half an hour after taking his medication. In the last 30 days, how much of a
problem does Sean have breathing?
 None, Mild, Moderate, Severe, Extreme
66
Vignette Assumptions
 As the objective health situation of the person
described in the vignette(s) is the same for all
respondents, anchoring vignettes can identify
individual variation in subjective thresholds
 Vignette equivalence: Assume all respondents
recognise the vignette as representing the same
dimension of health, thus variation in its evaluation
derives only from reporting differences
 Response consistency: Assume respondents rate
their own health in the same way as the vignette, the
common cut-points estimated from the vignette
responses can be imposed on the evaluation of own
health
67
Anchoring Vignettes (King et al. 2004)
68
Anchoring Vignettes (King et al. 2004)
69
Anchoring Vignettes (King et al. 2004)
70
Vignettes and Life Satisfaction
Source Kapteyn et al 2011
Considerations II
Frequency of Collection
MOT versus Speedometer
Language for use in policy
Well-Being and Mental Health
Well-Being and Behaviour
Paternalism and neo-paternalism
Considerations III
Ethical basis of consumption
Political economy of measurement
Is well-being a distraction?
Well-Being and productivity
Bank bailouts
Options for Ireland
Index constructed from ESS
Aging studies - TILDA/SHARE
Regular tracking from CSO through
QNHS
Welfare of targeted groups
Migrants into Ireland
Irish abroad
NI Measures
Extra Slides on Influence on Measures
US National Well-Being Index
 The Gallup-Healthways Well-Being Index
 Daily measure of health and well-being in the U.S.
 Over 500 adults interviewed every day
 Total nterviews: 2012 n = 353,564 and 2011 n =
353,492
 Real-time measurement of life-evaluation,
emotional health, physical health and health
behaviours, work environment
Daily data
Source: http://www.well-beingindex.com/
Well being questions: Emotional health
 Now, please think about yesterday, from the
morning until the end of the day. Think about
where you were, what you were doing, who you
were with and how you felt. Were you treated
with respect all day yesterday? Did you smile or
laugh a lot yesterday? Did you learn or do
something interesting yesterday? Did you have
enough energy to get things done yesterday?
 Did you experience the following feelings during
A LOT OF THE DAY yesterday? How about
enjoyment, physical pain, worry, sadness, stress,
anger, happiness? (asked individually)
Emotional health: 1% drop in
recession
Source: http://www.well-beingindex.com/
Well being questions: Evaluation Index
 Please imagine a ladder with steps numbered from
0 at the bottom to 10 at the top. The top of the
ladder represents the best possible life for you and
the bottom of the ladder represents the worst
possible life for you. On which step of the ladder
would you say you personally feel you stand at this
time?
Life-evaluation: Substantial drop
(approx. 10%)
Source: http://www.well-beingindex.com/