Happiness, Subjective
Wellbeing and Behavioural
Economics: Old Ideas, New
Understandings
Jon.Hall@abs.gov.au
Two Key Questions
How do we measure Subjective
Wellbeing?
Why do we need to measure Subjective
Wellbeing?
Two Key Questions
How do we measure Subjective
Wellbeing?
Two Key Questions
How do we measure Subjective
Wellbeing?
What is Subjective Wellbeing?
What is Subjective Wellbeing?
How individuals rate the quality of their lives
Two broad approaches based on…
1. How individuals evaluate the quality of
their lives.
2. Positive and negative emotions,
measured momentarily or remembered.
What is Subjective Wellbeing?
Different questions, different uses
“How satisfied are you with your life?” is much more
influenced by life circumstances than our day to day
emotions.
People are “happier” at the weekend, but no more
satisfied with life overall.
Life satisfaction questions are useful for looking at
which circumstances of life drive happiness.
What is Subjective Wellbeing?
Different questions, different uses
Momentary assessments – based on (in real)
time use diaries – show different answers to
remembered assessments
e.g. time spent with children, experiences of
pain
Which is the more important to understand?
What is Subjective Wellbeing?
Different questions, different uses
Evidence shows respondents do interpret
their relative position in the world well
e.g. self-assessed health declines with age.
But the decline is eliminated when
respondents are asked to compare their
health to their peers.
Ed Diener’s Would You Move? Test
of validity
Life Evaluation Ladder – Ideal to Worst
Denmark
8.0
Togo
3.2
Finland
7.7
Cambodia
3.6
Switzerland
7.5
Sierra Leone
3.6
Netherlands
7.5
Georgia
3.7
Spain
7.2
Zimbabwe
3.8
Ireland
7.1
West Bank
4.7
Why do we need to measure
Subjective Wellbeing?
1. Happiness/Wellbeing is a legitimate goal of public policy
Why do we need to measure
Subjective Wellbeing?
1. Happiness/Wellbeing is a legitimate goal of public policy
2. SWB drives objective wellbeing
Why do we need to measure
Subjective Wellbeing?
1. Happiness/Wellbeing is a legitimate goal of public policy
2. SWB drives objective wellbeing
3. SWB measures can promote a facts-based debate about the statistics that
matter
Why do we need to measure
Subjective Wellbeing?
1. Happiness/Wellbeing is a legitimate goal of public policy
2. SWB drives objective wellbeing
3. SWB measures can promote a facts-based debate about the statistics that
matter
4. Looking at policy through an SWB lens generates new ideas
Why do we need to measure
Subjective Wellbeing?
1. Happiness is a legitimate goal of public policy
2. SWB drives objective wellbeing
3. SWB measures can promote a facts-based debate about the statistics that
matter
4. Looking at policy through an SWB lens generates new ideas
Bhutan
USA
Why do we need to measure
Subjective Wellbeing?
1. Happiness/wellbeing is a legitimate goal of public policy
2. SWB drives objective-wellbeing
3. SWB measures can promote a facts-based debate about the statistics that
matter
4. Looking at policy through an SWB lens generates new ideas
Happiness and Health
This is a new science
Extremely difficult to test for links between
happiness and health because of confounding
variables, false causality etc. etc. – few
“laboratory” experiments are possible
Happiness and Health
Happiness and Health
Happiest Quartile
Least happy Quartile
90%
34%
54%
11%
% Surviving to 85
% Surviving to 94
Happiness and Health
Social Benefits of Happiness
Trust
Happiness
Social
Connections
Why do we need to measure
Subjective Wellbeing?
1. Happiness/wellbeing is a legitimate goal of public policy
2. SWB drives objective wellbeing
3. SWB measures can promote a facts-based debate about the statistics that
matter
4. Looking at policy through an SWB lens generates new ideas
Happiness and the headlines
Happiness and the headlines
Discovered: The Happiest Man in
America
By CATHERINE RAMPELL
Published: March 5, 2011
Gallup’s answer: he’s a tall, Asian-American,
observant Jew who is at least 65 and married,
has children, lives in Hawaii, runs his own
business and has a household income of more
than $120,000 a year. A few phone calls later
and ...
Happiness and the headlines
Happiness
Monthly happiness indicator triggers public discussion
1. Why the changes?
2. Which groups/regions faring differently?
Trojan Horse for facts-based debate about health, wealth,
education, employment, environment etc. etc.
TIME
Why do we need to measure
Subjective Wellbeing?
1. Happiness/wellbeing is a legitimate goal of public policy
2. SWB drives objective wellbeing
3. SWB measures can promote a facts-based debate about the statistics that
matter
4. Looking at policy through an SWB lens generates new ideas
Behavioural Economics
Behavioural Economics
People do not seek necessarily to maximise their own
utility.
Behavioural Economics
People do not seek necessarily to maximise their own
utility.
Which would you prefer?
a. You and all your team receive $1000 pay rise
Behavioural Economics
People do not seek necessarily to maximise their own
utility.
Which would you prefer?
a. You and all your team receive $1000 pay rise
b. You get a $2k rise – your colleagues each get $5k
Behavioural Economics
People do not seek necessarily to maximise their own
Economic
utility.
theory
says b)
Which would you prefer?
Human
nature
a. You and all your team receive $1000 pay rise
says a)
b. You get a $2000 rise – your colleagues each get $5k
Behavioural Economics
Unemployment, happiness and your partner
Happiest
State of
Affairs
You
Your partner
1
Employed
Employed
2
Employed
Unemployed
3
Unemployed
Unemployed
4
Unemployed
Employed
Behavioural Economics
Ingenious natural experiments ….
The Dutch postcode lottery –
keeping up with the Van Jones’s
Feelings matter – for behaviour &
policy
High
Subjective
Wellbeing
Wellbeing
High
Objective
Wellbeing
Low Objective Adaptation
Wellbeing
Low
Subjective
Wellbeing
Dissonance
Deprivation
Feelings matter – for behaviour &
policy responses
High Fear of Crime
High Risk of Crime
Low Risk of Crime
Low Fear of Crime
Feelings matter – for behaviour &
policy responses
High Fear of Crime
High Risk of Crime
Low Risk of Crime
Your doors are locked
and you have a dog:
email your MP
Low Fear of Crime
Feelings matter – for behaviour &
policy responses
High Risk of Crime
Low Risk of Crime
High Fear of Crime
Low Fear of Crime
Your doors are locked
and you have a dog:
email your MP
Start locking your doors
and buy a dog – then
email your MP (if your
computer hasn’t been
stolen)
Feelings matter – for behaviour &
policy responses
High Fear of Crime
Low Fear of Crime
High Risk of Crime
Your doors are locked
and you have a dog:
email your MP
Start locking your doors
and buy a dog – then
email your MP (if your
computer hasn’t been
stolen)
Low Risk of Crime
Open your doors and
give your dog to your
MP
Feelings matter – for behaviour &
policy responses
High Fear of Crime
Low Fear of Crime
High Risk of Crime
Your doors are locked
and you have a dog:
email your MP
Start locking your doors
and buy a dog – then
email your MP (if your
computer hasn’t been
stolen)
Low Risk of Crime
Open your doors and
give your dog to your
MP
How’s the weather in
Japan?
The Policy Revolution
Subjective Wellbeing – the New
Business of Government
From Bhutan to the UK, governments are getting serious
about measuring “happiness” … “subjective wellbeing:” …
“flourishing societies”
“To those who say that all this sounds like a distraction
from the serious business of government, I say finding out
what will really improve lives and acting on it is the
serious business of government."
David Cameron, 2010
3. Subjective Wellbeing – the New
Business of Government
From Bhutan to the UK, governments are getting serious about measuring
“happiness” … “subjective wellbeing:” … “flourishing societies”
A new science…. but we know that wellbeing matters
Subjective Wellbeing – the New
Business of Government
From Bhutan to the UK, governments are getting serious about measuring
“happiness” … “subjective wellbeing:” … “flourishing societies”
A new science…. but we know that wellbeing matters
a. Different conversations e.g. community cohesion
Subjective Wellbeing – the New
Business of Government
From Bhutan to the UK, governments are getting serious about measuring
“happiness” … “subjective wellbeing:” … “flourishing societies”
A new science…. but we know that wellbeing matters
a. Different conversations
b. Different behaviours & policies e.g. commuting or
police investigations
Subjective Wellbeing – the New
Business of Government
From Bhutan to the UK, governments are getting serious about measuring
“happiness” … “subjective wellbeing:” … “flourishing societies”
A new science…. but we know that wellbeing matters
a. Different conversations
b. Different behaviours & policies
c. Cost benefit analyses – inflation vs. unemployment
Subjective Wellbeing – the New
Business of Government
From Bhutan to the UK, governments are getting serious about measuring
“happiness” … “subjective wellbeing:” … “flourishing societies”
A new science…. but we know that wellbeing matters
a.
b.
c.
d.
Different conversations
Different behaviours &
Cost benefit analyses
Management practices – the weekend effect
Subjective Wellbeing – the New
Business of Government
From Bhutan to the UK, governments are getting serious about measuring
“happiness” … “subjective wellbeing:” … “flourishing societies”
A new science…. but we know that wellbeing matters
a.
b.
c.
d.
e.
Different conversations
Different behaviours & policies
Cost benefit analyses
Management practices
Korea’s response to the GFC
Subjective Wellbeing – the New
Business of Government
From Bhutan to the UK, governments are getting serious
about measuring “happiness” … “subjective wellbeing:” …
“flourishing societies”
A new science…. but we know that wellbeing matters
By 2030…? Radical reform of the how we
understand/think about policy…
Subjective Wellbeing – the New
Business of Government
Consider education policy.
To educate and build socially inclusive communities where
all Australians have the opportunity to reach their full
potential and to actively participate in a rewarding
economic and social life.
DEEWR, 2011
Subjective Wellbeing – the New
Business of Government
Consider education policy.
To educate and build socially inclusive communities where all Australians have
the opportunity to reach their full potential and to actively participate in a
rewarding economic and social life.
DEEWR, 2011
But that requires understanding:
1) What is a “ rewarding” life?
Subjective Wellbeing – the New
Business of Government
Consider education policy.
To educate and build socially inclusive communities where all Australians have
the opportunity to reach their full potential and to actively participate in a
rewarding economic and social life.
DEEWR, 2011
But that requires understanding:
1) What is a “ rewarding” life?
2) How education contributes to broader wellbeing. What
are the social outcomes of learning?
Subjective Wellbeing – the New
Business
of
Government
Which requires
Consider education policy.
new measures. We
To educate and build socially inclusive communities where all Australians have
the opportunity to manage
reach their full potential
and to actively
participate in a
what
we
rewarding economic and social life.
measure.
DEEWR, 2011
But that requires understanding
1) What is a “ rewarding” life
2) How education contributes to broader wellbeing. What are the social
outcomes of learning?
Subjective Wellbeing….
1. Affects our outcomes in many aspects of life
2. Affects our behaviour in many aspects of life
3. Is a legitimate goal of policy-making
We used to think that revolutions are the
cause of change. Actually it is the other
way around: change prepares the ground
for revolution.
Eric Hoffer