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

Author

Listed:
  • Daniel J. Benjamin
  • Ori Heffetz
  • Miles S. Kimball
  • Nichole Szembrot

Abstract

This paper proposes foundations and a methodology for survey-based tracking of well-being. First, we develop 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, we demonstrate our proposed method for estimating the aspects' relative marginal utilities—a necessary input for constructing an individual-level well-being index—by asking ~4,600 U.S. survey respondents to state their preference between pairs of aspect bundles. We estimate high relative marginal utilities for aspects related to family, health, security, values, freedom, happiness, and life satisfaction.

Suggested Citation

  • Daniel J. Benjamin & Ori Heffetz & Miles S. Kimball & Nichole Szembrot, 2014. "Beyond Happiness and Satisfaction: Toward Well-Being Indices Based on Stated Preference," American Economic Review, American Economic Association, vol. 104(9), pages 2698-2735, September.
    • Handle: RePEc:aea:aecrev:v:104:y:2014:i:9:p:2698-2735
    Note: DOI: 10.1257/aer.104.9.2698
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    References listed on IDEAS

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    1. Fleurbaey,Marc & Maniquet,François, 2011. "A Theory of Fairness and Social Welfare," Cambridge Books, Cambridge University Press, number 9780521715348, December.
    2. Oswald, Andrew J. & Powdthavee, Nattavudh, 2008. "Does happiness adapt? A longitudinal study of disability with implications for economists and judges," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1061-1077, June.
    3. Koen Decancq & Luc Van Ootegem & Elsy Verhofstadt, 2013. "What If We Voted on the Weights of a Multidimensional Well‐Being Index? An Illustration with Flemish Data," Fiscal Studies, Institute for Fiscal Studies, vol. 34, pages 315-332, September.
    4. Sen, Amartya, 1979. "The Welfare Basis of Real Income Comparisons: A Survey," Journal of Economic Literature, American Economic Association, vol. 17(1), pages 1-45, March.
    5. Camerer, Colin F & Hogarth, Robin M, 1999. "The Effects of Financial Incentives in Experiments: A Review and Capital-Labor-Production Framework," Journal of Risk and Uncertainty, Springer, vol. 19(1-3), pages 7-42, December.
    6. Ed Diener, 2006. "Guidelines for National Indicators of Subjective Well-Being and Ill-Being," Journal of Happiness Studies, Springer, vol. 7(4), pages 397-404, November.
    7. Loewenstein, George & Ubel, Peter A., 2008. "Hedonic adaptation and the role of decision and experience utility in public policy," Journal of Public Economics, Elsevier, vol. 92(8-9), pages 1795-1810, August.
    8. M. Fleurbaey., 2012. "Beyond GDP: The Quest for a Measure of Social Welfare," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 3.
    9. Daniel J. Benjamin & Ori Heffetz & Miles S. Kimball & Alex Rees-Jones, 2012. "What Do You Think Would Make You Happier? What Do You Think You Would Choose?," American Economic Review, American Economic Association, vol. 102(5), pages 2083-2110, August.
    10. Fleurbaey, Marc & Blanchet, Didier, 2013. "Beyond GDP: Measuring Welfare and Assessing Sustainability," OUP Catalogue, Oxford University Press, number 9780199767199.
    11. Marc Fleurbaey & Erik Schokkaert & Koen Decancq, 2008. "What Good is Happiness?," OPHI Working Papers 20, Queen Elizabeth House, University of Oxford.
    12. Daniel J. Benjamin & Ori Heffetz & Miles S. Kimball & Alex Rees-Jones, 2014. "Can Marginal Rates of Substitution Be Inferred from Happiness Data? Evidence from Residency Choices," American Economic Review, American Economic Association, vol. 104(11), pages 3498-3528, November.
    13. Daniel Kahneman & Alan B. Krueger, 2006. "Developments in the Measurement of Subjective Well-Being," Journal of Economic Perspectives, American Economic Association, vol. 20(1), pages 3-24, Winter.
    14. Dolan, Paul & Layard, Richard & Metcalfe, Robert, 2011. "Measuring subjective well-being for public policy," LSE Research Online Documents on Economics 35420, London School of Economics and Political Science, LSE Library.
    15. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132-132.
    16. Koen Decancq & María Ana Lugo, 2013. "Weights in Multidimensional Indices of Wellbeing: An Overview," Econometric Reviews, Taylor & Francis Journals, vol. 32(1), pages 7-34, January.
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    More about this item

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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