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What do self - reports of wellbeing say about life - cycle theory and policy?

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  • Angus Deaton

    (Princeton University and University of Southern California)

Abstract

I respond to Atkinson's plea to revive welfare economics, and to considering alternative ethical frameworks when making policy recommendations. I examine a measure of self-reported evaluative wellbeing, the Cantril Ladder, and use data from Gallup to examine well-being over the life-cycle. I assess the validity of the measure, and show that it is hard to reconcile with familiar theories of intertemporal choice. I find a worldwide optimism about the future; in spite of repeated evidence to the contrary, people consistently but irrationally predict they will be better off five years from now. The gap between future and current wellbeing diminishes with age, and in rich countries, is negative among the elderly. I also use the measure to think about income transfers by age and sex. Policies that give priority those with low incomes favor the young and the old, while utilitarian policies favor the middle aged, and men over women.

Suggested Citation

  • Angus Deaton, 2018. "What do self - reports of wellbeing say about life - cycle theory and policy?," Working Papers 2018-02, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
  • Handle: RePEc:pri:rpdevs:2018-02
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    References listed on IDEAS

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    1. Blanchflower, David G. & Oswald, Andrew J., 2008. "Is well-being U-shaped over the life cycle?," Social Science & Medicine, Elsevier, vol. 66(8), pages 1733-1749, April.
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    6. repec:pri:cheawb:deaton_income_health_and_wellbeing_around_the_world_evidence_%20from_gall is not listed on IDEAS
    7. Arthur A. Stone & Joseph E. Schwartz & Joan E. Broderick & Angus Deaton, 2010. "A snapshot of the age distribution of psychological well-being in the United States," Working Papers 1230, Princeton University, Woodrow Wilson School of Public and International Affairs, Center for Health and Wellbeing..
    8. 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.
    9. Angus Deaton & Arthur A. Stone, 2016. "Understanding context effects for a measure of life evaluation: how responses matter," Oxford Economic Papers, Oxford University Press, vol. 68(4), pages 861-870.
    10. Anthony B. Atkinson, 2011. "The Restoration of Welfare Economics," American Economic Review, American Economic Association, vol. 101(3), pages 157-161, May.
    11. 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.
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    14. Anne Case & Angua Deaton, 2015. "Rising morbidity and mortality in midlife among white non-Hispanic Americans in the 21st century," Working Papers 15078.full.pdf, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
    15. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
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    Cited by:

    1. Blanchflower, David G., 2020. "Unhappiness and age," Journal of Economic Behavior & Organization, Elsevier, vol. 176(C), pages 461-488.
    2. Hotchkiss, Julie L. & Moore, Robert E. & Rios-Avila, Fernando, 2020. "Cost of policy choices: A microsimulation analysis of the impact on family welfare of unemployment and price changes," Journal of Macroeconomics, Elsevier, vol. 63(C).
    3. Dolan, Paul & Kavetsos, Georgios & Krekel, Christian & Mavridis, Dimitris & Metcalfe, Robert & Senik, Claudia & Szymanski, Stefan & Ziebarth, Nicolas R., 2019. "Quantifying the intangible impact of the Olympics using subjective well-being data," Journal of Public Economics, Elsevier, vol. 177(C), pages 1-1.
    4. Diane Coyle & Leonard I. Nakamura, 2019. "Toward a Framework for Time Use, Welfare, and Household Centric Economic Measurement," Working Papers 19-11, Federal Reserve Bank of Philadelphia.
    5. Hanjie Wang & Qiran Zhao & Yunli Bai & Linxiu Zhang & Xiaohua Yu, 2020. "Poverty and Subjective Poverty in Rural China," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 150(1), pages 219-242, July.
    6. Bart Los & Marcel P. Timmer, 2020. "Measuring Bilateral Exports of Value Added: A Unified Framework," NBER Chapters, in: The Challenges of Globalization in the Measurement of National Accounts, National Bureau of Economic Research, Inc.
    7. David G. Blanchflower, 2021. "Is happiness U-shaped everywhere? Age and subjective well-being in 145 countries," Journal of Population Economics, Springer;European Society for Population Economics, vol. 34(2), pages 575-624, April.
    8. David G. Blanchflower & Carol L. Graham, 2020. "The Mid-Life Dip in Well-Being: Economists (Who Find It) Versus Psychologists (Who Don't)!," NBER Working Papers 26888, National Bureau of Economic Research, Inc.
    9. Fulvio Castellacci & Henrik Schwabe, 2020. "Internet, unmet aspirations and the U-shape of life," PLOS ONE, Public Library of Science, vol. 15(6), pages 1-22, June.

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    More about this item

    JEL classification:

    • A20 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - General
    • D60 - Microeconomics - - Welfare Economics - - - General

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