Why measure subjective well-being?


The search for measures of progress that might replace GDP is a timely and necessary one, but only a single metric will do the trick. 

What an achievement! Only eight years ago the OECD first asked “What is progress?”. Since then we have had three major OECD conferences on the subject and now a major OECD initiative on the international measurement of subjective well-being. Last year Britain became the first advanced country to take its own measurements, and there is worldwide demand for an alternative to GDP as a way of assessing how we are doing.

But what should the alternative be? Until now both the OECD and the UK government have, probably wisely, been pulling their punches. They have been saying that many things are important–subjective well-being, yes, but also education, health, law and order, governance, income, and so on. Visitors to the OECD Better Life Initiative website are invited to choose their own weights in deciding how much each of these matter. But, if so, what is happening may not make much difference. After all, we have had the Social Indicators movement for about fifty years, during which time the grip of GDP as the talisman of national performance became ever stronger. We shall only displace the use of GDP by providing a single, convincing alternative.

That alternative is, to me, obvious. It is the quality of life as people subjectively experience it. In a fully democratic world the weights that policymakers attach to different aspects of life should reflect the importance they have to the population at large. In other words, policymakers should take the subjective well-being of the population as their goal and think of all other goods like education, health and income as means to that end. If you ask why, I would argue as follows. There is one simple test of what is the ultimate good for humans–that we find it self-evidently good. So we can list all the goods we consider important: freedom, health, achievement, income, happiness and so on. We can then ask of each “Why is it good?”. If we ask, for example, why freedom is good, people will say slavery makes people miserable. Similarly with ill-health, and so on. But if we ask, why does it matter if people are miserable or happy, no reason can be given. It is self-evident.

This is the philosophical reason for the long-established tradition of thought which believes that the best societies are those in which there is the most happiness and the least misery. In the 18th and 19th centuries this was a commonplace view, and it helped to usher in a more humane social order. But in the early 20th century it took a severe blow from the growth of philosophical scepticism about whether you could know how anyone else felt. This was compounded by the behaviourist revolution in psychology which believed that all you could study was behaviour and not feelings or motives.

Fortunately psychology has changed track in the last 50 years, and returned to the view that feelings have an objective reality. For example, researchers have correlated the happiness which an individual self-reports and the corresponding estimate made by a friend. The correlation is good–which (when you think of it) is an essential condition for effective friendship and social life. But more decisive for the intellectual debate has been the discovery by neuro-psychologists of the areas of the brain where happiness and misery are experienced. Here we have good correlations–both across time and across individuals–of self-reported happiness and electronic readings in the brain. This I believe should settle the argument about whether our feelings have sufficient objective reality to be taken very seriously. It should also make us reasonably confident in using self-reports as the main way in which we measure how happy people are.

That is why it is so encouraging that the OECD are now developing standard ways in which to measure subjective well-being that could be used by governments for their own domestic purposes and for purposes of international comparison.

Of all the measures of subjective well-being, life-satisfaction has been the most intensively studied. In one extremely helpful approach life-satisfaction depends on satisfaction with the different domains of life. And domain-satisfaction depends in turn on more detailed causes including public service delivery and satisfaction with the service. It thus provides information of real use to policymakers.

So how would a policymaker use regularly-collected data? There are many ways. The policymaker would monitor trends in the aggregate life of the community and see which areas are going better and which worse.

They would look hard at the distribution of well-being, and see who is in misery and who is flourishing. From this the policymaker would get ideas for policy change. There are then two ways in which he could assess these possible changes in terms of their effect on overall life-satisfaction: one would be to use a causal model to form an impression of what difference an action might make to the well-being of the population. A more exact estimate would come from a controlled experiment.

In every case the final outcome of course would be the well-being of the population, and the policymaker might wish to give more weight to reductions in misery, compared with increases in happiness. That would be an ethical choice, but all other steps in the analysis would be based on positive social science. It seems to me highly likely that this type of quantitative analysis will become routine practice in many governments within the next 20-30 years.

I have been involved in cost-benefit analysis using the money metric for 40 years. But its weakness becomes increasingly apparent–it inevitably ignores income distribution (treating each dollar as equivalent) and it cannot handle many of the most important influences on human happiness which are social influences not amenable to willingness-to-pay analysis. The concept of QALY (quality-adjusted life year) used in health research is much better but, as practised, it involves arbitrary weighting of different dimensions of experience. So, once again, we come to the over-arching criterion of life-satisfaction.

It is wonderful that the OECD has taken the initiative to find a better concept of progress. But it would be a tragedy if despite current scepticism about the GDP criterion, nothing changed, due to disagreement about a coherent alternative. The money metric has a strong but limited logic. It will only be displaced by another single metric. If what we ultimately value is the quality of human experience, that metric should be centred on happiness and misery.


Layard, Richard (2005), Happiness–Lessons from a New Science, Penguin.

See also: 

Stiglitz, Joseph (2009), “Progress, what progress?”, OECD Observer No 272, March, Paris.

OECD Observer (2011), “Better measures for better lives”, No 284, Q1, Paris. 

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©OECD Observer No 290-291, Q1-Q2 2012

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