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Outline Can well-being be meaningfully measured? - Life satisfaction - New developments (e.g, DRM) - External validity If we tentatively accept Subjective.

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Presentation on theme: "Outline Can well-being be meaningfully measured? - Life satisfaction - New developments (e.g, DRM) - External validity If we tentatively accept Subjective."— Presentation transcript:

1 Outline Can well-being be meaningfully measured? - Life satisfaction - New developments (e.g, DRM) - External validity If we tentatively accept Subjective Well-Being (SWB) measures as having signal, what do they imply? How can SWB measures be used for Policy Evaluation? U-Index Well-Being and Policy Evaluation Alan B. Krueger

2 Number of Articles Listed in EconLit Using Data on Subjective Well-Being

3 Applications of SWB to Public Policy Macro Policy Evaluation: Does regulation make people better off? How do people trade off inflation for unemployment? Is smoking rational: do cigarette taxes improve welfare? Alesina, Glaeser & Sarcedote (2005) Di Tella, MacCulloch & Oswald (2001) Gruber & Mullainathan (2004) Micro Policy Evaluation: An outcome measure in experiments. Examples: If public housing residents are given a voucher to move to a new neighborhood, does their affect change? If people are given more generous health insurance, are they more likely to feel “calm and peaceful”? Kling, Liebman & Katz (2005). Rand Health Care Experiment Socio-economic Indicators Gauge Economics Indicators (e.g., CPI); Nordhaus (1998); Krueger & Siskind (1998) NWBA – UK, Australia, Bhutan, and others hurling towards Understand Features of “Utility Function” Adaptation Relative income matters (Easterlin, Luttmer, Oswald, Ferrer-i-Carbonell) Policy Implications (Layard: taxation) Social Interactions

4 The typical life-satisfaction measure (WVS) All things considered, how satisfied are you with your life as a whole these days? Dissatisfied 1 2 3 4 5 6 7 8 9 10 Satisfied  This measure is based on a global judgment, which also involves a standard of reference at least implicitly

5 Partial Validation of Global Subjective Well-Being Brain scans  Happier people have greater electrocortical activity in the left than in the right prefrontal cortex (Urry, et al., 2004)  correlation of 0.30 (p=.005) between life satisfaction and left-right difference in brain activation Health  Happier people have a stronger response to an influenza vaccine (Cohen et. al, 2003) and recover more quickly from controlled wounds (Kiecolt-Glaser, et al., 2002).  Rapid development of this field, using both experimental and correlational methods

6 3 Puzzles of Global SWB: (1) Adaptation; (2) Large Country Effects; (3) Duration Neglect  Brickman and Campbell: the hedonic treadmill  Paraplegics and lottery winners regress close to average level of satisfaction quickly  Chronic pain and unemployment are exceptions  The Easterlin findings: no effect of real income growth on reported live satisfaction (e.g., Japan’s GDP per capita rose 6 fold since 1950, yet average satisfaction constant).  More recent studies find small cross-country and cross- individual correlations of satisfaction and income, but still puzzlingly small and effect of changes is mostly transitory.

7 From Lucas, Clark, Georgellis, and Diener (2003). N ~24,000

8 Source: Richard Layard (2004).

9 Despite a 250% increase in average real income in China from 1994 to 2005, no increase in reported life satisfaction

10 3 Possible Interpretations  Hedonic Treadmill (preferences adapt or attention shifts)  After adaptation takes place, true level of utility is not higher despite material gain. Chasing illusions.  Aspiration Treadmill (reference point adapts)  Adaptation causes us to raise our standard of comparison after material gain, but true level of utility is higher despite reported life satisfaction  Measure of Subjective Well-Being is Meaningless – result of faulty recall or unanswerable question? “Not everything that counts can be counted.”

11 Evaluative Memory: Duration Neglect Kahneman, Fredrickson et al, 1993: On two trials, separated by seven minutes, participants immerse a hand in cold water until instructed to remove it. Seven minutes after the second trial, they are called for a third trial and are asked which of the two trials they want to repeat. Short: 60 sec at 14  C Long: 60 sec at 14  C + 30 sec  15  C 65-80% prefer Long Duration Neglect; Peak-End Rule This is not an isolated finding: sound; vice; behaviors like job turnover

12 Advance: Experience Sampling Method  In the experience sampling technique (ESM), people are asked to report in detail on the experience of specific moments – Current Gold Standard. - Helps to avoid standard of comparison and theory giving - Avoids distortion of memory  Is the treadmill a characteristic of real-time experience? Or is it a characteristic of evaluative memory?

13 Experience sampling How do you feel right now? Please rate each feeling on the scale given. A rating of 0 means that you are not experiencing that feeling at all. A rating of 6 means that this feeling is a very important part of the experience. Not at all Very Much Happy............... 0 1 2 3 4 5 6 Frustrated/annoyed.... 0 1 2 3 4 5 6  A profile of affect can be generated, and aggregated objectively with duration weights

14 ESM also correlated with biological responses Cortisol measurement by quintile of happiness over the working day Copyright ©2005 by the National Academy of Sciences Source: Steptoe, Wardle and Marmot (2005) Proc. Natl. Acad. Sci. USA. Mean Salivary Cortisol (Measured by ESM) P=.009 Copyright ©2005 by the National Academy of Sciences

15 Summary of ESM Findings on Adaptation  Experience sampling studies suggest that hedonic adaptation takes place – e.g., Riis, et al’s (2005) study of patients undergoing kidney dialysis and matched comparisons. ESM finds as much adaptation as global questions.  New 9/11 results  Hedonic adaptation may be understated by global satisfaction measures.

16 Wisconsin Sample (ESM) Data provided by T. Baker, M. Fiore & S. Shiffman (Grant: Pharmacotherapies: Efficacy, Mechanisms, and Algorithms).

17 Enthusiasm Before and After 9/11

18 Summary of ESM Findings on Adaptation  Experience sampling studies suggest that hedonic adaptation takes place – e.g., Riis, et al’s (2005) study of patients undergoing kidney dialysis and matched comparisons. If anything, ESM finds more adaptation than global questions  New 9/11 results  Hedonic adaptation may be understated by global satisfaction measures.  ESM not practical for large samples and prompt could be disruptive for some events (e.g., driving car)

19 The research team: Daniel Kahneman, Princeton University Alan Krueger, Princeton University David Schkade, University of Texas Norbert Schwarz, University of Michigan Arthur Stone, Stony Brook University Looking for an alternative measure of well-being -- alternative to Overall Life Satisfaction, ESM and GDP. A More Efficient Alternative to ESM

20 Procedures of the K 2 S 3 DRM Studies  Participants were 909 working women in Texas. Over sample teachers and nurses and then weight.  Survey administered in large groups at a central location, where they received instructions and had an opportunity to ask questions  They were given 4 envelopes, which were to be opened sequentially. Each envelope contained a questionnaire. The questionnaires were labeled “Packets” 1-4  Packet 1 contained standard life satisfaction questions and some demographics.  Packet 2 asked respondents to segment the preceding day (a work day) into episodes, like scenes in a film (mean = 15 episodes); didn’t collect diaries from them at the end.  In Packet 3 they answered detailed questions about the setting of each episode and about their feelings (shown next)  Packet 4 had mood, personality and job questions

21 DRM Episode Questions: What were you doing? (check all that apply) __ commuting__ working __ shopping__ preparing food __ doing housework__ taking care of your children __ eating__ pray/worship/meditate __ socializing__ watching TV __ nap/resting__ computer/internet/email __ relaxing__ on the phone __ intimate relations__ exercising __ other (please specify________________)

22 DRM Episode Questions: Where, Who With

23 DRM Episode Questions: Feelings How did you feel during this episode? Please rate each feeling on the scale given. A rating of 0 means that you did not experience that feeling at all. A rating of 6 means that this feeling was a very important part of the experience. Please circle the number between 0 and 6 that best describes how you felt. Not at all Very much Impatient for it to end.........0 1 2 3 4 5 6 Happy......................0 1 2 3 4 5 6 Frustrated/annoyed........... 0 1 2 3 4 5 6 Depressed/blue..............0 1 2 3 4 5 6 Competent/capable...........0 1 2 3 4 5 6 Hassled/pushed around.......0 1 2 3 4 5 6 Warm/friendly...............0 1 2 3 4 5 6 Angry/hostile................0 1 2 3 4 5 6 Worried/anxious............. 0 1 2 3 4 5 6 Enjoying myself..............0 1 2 3 4 5 6 Criticized/put down...........0 1 2 3 4 5 6 Tired.......................0 1 2 3 4 5 6

24 Findings: “A Suvey Method for Characterizing Daily Life Experience: The Day Reconstruction Method,” Science, December 2004.  Allocation of time over the course of the day seems reasonable.  Much of variability across episodes is due to individual differences in affect. Use scale differently? Much is unexplained variance.  Results mirror Experience Sampling to the extent we can check.

25 ESM Comparison of DRM and ESM Affect over Time of Day

26 ≤ 6 hours ≥ 7 hours People Who Sleep Less Per Night Report Being More Tired – Similar Use of Scales

27 Activities (DRM) Net Affect = Avg. of 3 Positive Adjectives less avg. of 5 Negative Adjectives Enjoyment; Warm; Happy Frustrated; Worried; Depressed; Angry; Hassled; Criticized

28 The overwhelming importance of social contacts. Interaction Partners (DRM) Average Net Affect

29 The Interpretation of Satisfaction  In our data on satisfaction, affect and income, the correlation between feeling happy and log income (.05) is lower than the correlation between life satisfaction and income (.20).  In our data, as well as in data reported by Juster, divorced women are significantly less satisfied with their lives, but significantly more cheerful moment to moment  The life satisfaction question apparently evokes a comparison of one’s life to a standard, to some extent reminding the divorced of their problems and the rich of their good fortune  Most objective circumstances matter more for satisfaction than affect (an exception is time pressure at work)  Even more adaptation, except for time pressure at work

30 Applications of SWB to Public Policy Macro Policy Evaluation: Does regulation make people better off? How do people trade off inflation for unemployment? Is smoking rational: do cigarette taxes improve welfare? Alesina, Glaeser & Sarcedote (2005) Di Tella, MacCulloch & Oswald (2001) Gruber & Mullainathan (2004) Micro Policy Evaluation: An outcome measure in experiments. Examples: If public housing residents are given a voucher to move to a new neighborhood, does their affect change? If people are given more generous health insurance, are they more likely to feel “calm and peaceful”? Kling, Liebman & Katz (2005). Rand Health Care Experiment Socio-economic Indicators Gauge Economics Indicators (e.g., CPI); Nordhaus (1998); Krueger & Siskind (1998) NWBA – UK, Australia, Bhutan, and others hurling towards Understand Features of “Utility Function” Adaptation Relative income matters (Easterlin, Luttmer, Oswald, Ferrer-i-Carbonell) Policy Implications (Layard: taxation) Social Interactions

31 NWBA: Back to Bentham WB = Σ i (h ij μ ij )/N h ij = time person i spends in situation j μ ij = person i’s net affect in situation j WB = average over N people Requires cardinality. U i = Σ j h ij μ ij

32 U-Index (A Family of Indices) Percent of Time in Unpleasant State Data: intensity of m Negative Feelings and n Positive Feelings for each episode U1. Miserable episode if: Min (Negative Feelings) > Max (Positive Feelings)  nothing redeeming about the episode U2. Melancholy episode if: Max (Negative Feelings) > Max (Positive Feelings)  Most intense feeling is negative U-Index is percent of time people spend in an unpleasant or undesirable state.

33 Advantages of U-Index  Purely ordinal measure within person  Overcomes some aspects of cultural reporting differences in cross-country studies  Task people can perform easily  Aggregated by time  Can tailor emotions (e.g., pain and enjoyment) for particular problem of interest  Gets at a feature of society’s well-being  Gov’t may care about reducing misery, if not maximizing happiness – analogy is poverty rate  Understandable metric  Can perform counterfactuals (e.g., suppose reduce misery of commuting experiences)

34 U-Index Feelings Positive Emotions Enjoyment Warm Happy Negative Emotions Frustrated Worried Depressed Angry Hassled Criticized Compute U-Index for each person and then average over people. Misery Rate (U1) = 1% Melancholy Rate (U2) = 18% (or Dismal Rate)

35 Opening line of Tolstoy’s Anna Karenina: “Happy families are all alike; every unhappy family is unhappy in its own way.” Correlations between negative emotions is notably lower than correlations between positive emotions. Across episodes: Corr(Happy,Enjoyment) = 0.73 Corr(Criticized,Worried) = 0.32 Focus on U2 (Most intense feeling is negative)

36 Results for U2 Index  Ranking of activities is similar to net affect:  4% of time during intimate relations is unpleasant  8% of time socializing is unpleasant  16% of house cleaning time is unpleasant  20% of child care time is unpleasant  21% of work time is unpleasant  22% of time during commuting is unpleasant  The top 10% of people are responsible for 38% of the time that people are in an unpleasant state

37 U2 Index by Global Life Satisfaction “Taking all things together, how satisfied are you with your life as a whole these days?”

38 High Moderate Low

39 U-Index U2 Index and Suicide Rate by Time of Day U-Index Note: Suicide data are for Italian and women; Source: Preti and Mioto (2001).

40 Potential Applications of NWBA  Changes in the U-Index for a country over time can be tracked, and the growth can be decomposed into a component due to changes in the allocation of time across situations and a component due to changes in affective experience for a given set of situations.  For subpopulations (e.g., men versus women; rich versus poor) at a given time, differences in well-being can be attributed to differences in time allocated across situations and to differences in affect derived from a given set of situations.  Differences in the well-being of countries can be compared, and also decomposed to differences in time use and differences in affect derived for a given set of situations. Currently working on a study on France vs. U.S.

41 Conclusions/Remaining Challenges  Global measures of SWB appear to be correlated with some aspects of well-being, although there are systematic biases (e.g., duration neglect) and cultural differences in reporting  The tentative conclusion that adaptation represents a hedonic response makes measuring SWB more feasible  Interpersonal comparisons seem meaningful. Metric still unclear. U-Index avoids cardinality assumption. Want to validate U-Index further.  It is inevitable that SWB measures will miss some components of well-being, just like measuring decibels doesn’t inform us about the quality of music. Which adjectives to include? Sense of reaching goals? Question is whether SWB adds something useful over existing indicators like poverty rate and GDP growth.  Long way away from making prescriptive/normative statements about behavior and taxes, but description closer …  ATUS offers unique opportunity for U.S.  working on telephone version of DRM with Gallup. Hope to develop module to add to ATUS and regularly measure U-Index.


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