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The neglected dimension of well-being: Analyzing the development of “conversion efficiency” in Great Britain

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  • Binder, Martin
  • Broekel, Tom

Abstract

In Amartya Sen's capability approach, policy makers can focus on different levels to influence the well-being of a society. A dimension that is usually neglected is improving individuals’ “conversion efficiency”, i.e. the efficiency with which individual resources are converted into well-being. To examine effects of policies on (the development of) this measure we suggest an intertemporal index of conversion efficiency estimated via a nonparametric order-m approach. The approach is exemplified using data from the British Household Panel Survey (BHPS) from 1991 to 2006. We find that over this time horizon between 24% and 29% of individuals were efficient in their conversion of resources into well-being. Moreover, age and self-employment increase an individual's conversion efficiency, while living in London, being disabled and being separated, divorced or widowed all decrease conversion efficiency. Being married also decreases the conversion efficiency and we find few evidence of gender disparities in conversion efficiency.

Suggested Citation

  • Binder, Martin & Broekel, Tom, 2012. "The neglected dimension of well-being: Analyzing the development of “conversion efficiency” in Great Britain," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(1), pages 37-47.
    • Handle: RePEc:eee:soceco:v:41:y:2012:i:1:p:37-47
    DOI: 10.1016/j.socec.2011.10.002
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    1. John Hudson, 2006. "Institutional Trust and Subjective Well‐Being across the EU," Kyklos, Wiley Blackwell, vol. 59(1), pages 43-62, February.
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    1. Guarini, Giulio & Laureti, Tiziana & Garofalo, Giuseppe, 2020. "Socio-institutional determinants of educational resource efficiency according to the capability approach: An endogenous stochastic frontier analysis," Socio-Economic Planning Sciences, Elsevier, vol. 71(C).
    2. Martin Binder & Tom Broekel, 2012. "Happiness No Matter the Cost? An Examination on How Efficiently Individuals Reach Their Happiness Levels," Journal of Happiness Studies, Springer, vol. 13(4), pages 621-645, August.
    3. Huilin Wang & Xinxin Ma, 2019. "The Determinants of Utilization Ability and the Effects on the Functionings of Elders: Evidence from China," Asian Development Policy Review, Asian Economic and Social Society, vol. 7(2), pages 80-97, June.
    4. Henderson, Heath & Follett, Lendie, 2022. "Targeting social safety net programs on human capabilities," World Development, Elsevier, vol. 151(C).
    5. Yuxiang Xie & E. Xie, 2021. "Comparing Income Poverty with Multidimensional Well-being Based on the "Conversion Efficiency"," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 154(1), pages 61-77, February.
    6. Nikolova Milena & Popova Olga, 2021. "Sometimes Your Best Just Ain’t Good Enough: The Worldwide Evidence on Subjective Well-being Efficiency," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 21(1), pages 83-114, January.
    7. Nikolova, Milena & Popova, Olga, 2017. "Sometimes Your Best Just Ain't Good Enough: The Worldwide Evidence on Well-Being Efficiency," IZA Discussion Papers 10774, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Capability approach; Conversion efficiency; Efficiency analysis; Intertemporal development;
    All these keywords.

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • D60 - Microeconomics - - Welfare Economics - - - General

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