Saturday, September 22, 2012

Beyond Happiness and Satisfaction: Toward Well-Being Indices Based on Stated Preference

Abstract: This paper helps provide foundations for survey-based tracking of well-being. First, we propose a theory in which utility depends on “fundamental aspects” of well-being, measurable with surveys. Second, drawing from psychologists, philosophers, and economists, we compile a comprehensive list of such aspects. Third, to estimate the aspects’ marginal utilities—a necessary input for constructing an individual-level well-being index—we conduct a survey in which ~4,600 U.S. respondents state their preference between pairs of aspect bundles. We estimate high relative marginal utilities not only for traditional happiness and life satisfaction measures, but even more for aspects related to family, health, security, values, and freedoms.

In policy scenarios, correlations between pairs of sets of the 131 coefficients are lower—although  still reasonably high—and range from 0.60 (liberals vs. conservatives) to 0.81 (more vs. less religious). Using the same method as above. Women rank higher: “people being good, moral people…” [women 1, men 35, cr = 0.50]. Men rank higher: “people getting the rewards and punishments they deserve” [men 5, women 75, cr = 0.58]. Liberals rank higher: the condition of animals, nature, and the environment [li. 1, co. 113, cr = 0.27]. Conservatives rank higher: “people’s ability to have and raise children” [co. 8, li. 111, cr = 0.33]. Older rank higher: being treated with dignity and respect [older 6, younger 76, cr = 0.53].

by Daniel J. Benjamin, Ori Heffetz, Miles S. Kimball and Nichole Szembrot
National Bureau of Economic Research (NBER)
NBER Working Paper No. 18374; Issued in September 2012

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