Measuring Happiness and Measuring Happiness and Making PolicyMaking Policy

Professor Paul DolanProfessor Paul DolanTanaka Business SchoolTanaka Business School

Imperial College LondonImperial College London

Well-being measures, standardized scores

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Income Life Sat

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Income versus happinessIncome versus happiness

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Well-being measures, standardized scores

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DD

Commute > 1hr/day

Over 70

Has children

Has degree

How do we decide? How do we decide?

Is the measure conceptually appropriate?Is the measure conceptually appropriate? Is the measure normatively relevant?Is the measure normatively relevant? Is the measure empirically useful?Is the measure empirically useful?

Is the measure conceptually Is the measure conceptually appropriate?appropriate?

Distinguish between good life and good for the Distinguish between good life and good for the individualindividual

Prudential value is suitable for most policy applicationsPrudential value is suitable for most policy applications– Both measures mostly contain prudential concernsBoth measures mostly contain prudential concerns

The measure should be a complete account of well-The measure should be a complete account of well-being being – There is more to life than income (and happiness?)There is more to life than income (and happiness?)

The measure should measure what it purports toThe measure should measure what it purports to– Allows us to make intra and inter-personal comparisonsAllows us to make intra and inter-personal comparisons

There is no gold standard but there is ‘validity’There is no gold standard but there is ‘validity’– Both measures converge with and predicts health etc.Both measures converge with and predicts health etc.

Is the measure normatively relevant?Is the measure normatively relevant?

The measure must be acceptable to policy The measure must be acceptable to policy makers and to the general public, at least in timemakers and to the general public, at least in time

Income is attractive because the individual judges Income is attractive because the individual judges what will be in his best interestswhat will be in his best interests

But may be questioned if it does not lead to LSBut may be questioned if it does not lead to LS And if preferences are misguided, myopic etc.And if preferences are misguided, myopic etc.

Support for LS may depend on language usedSupport for LS may depend on language used LS may be better than happiness, and misery LS may be better than happiness, and misery

better still?better still?

Is the measure empirically useful?Is the measure empirically useful?

Is it intra- and interpersonally comparable?Is it intra- and interpersonally comparable?– Both shaped by expectations, shaped by circumstancesBoth shaped by expectations, shaped by circumstances

Brain imaging and physiological measures may help LSBrain imaging and physiological measures may help LS Is it cardinal?Is it cardinal?

– LS performs better than income hereLS performs better than income here Is measurement error low?Is measurement error low?

– Both measures reasonably stable for most sub-groupsBoth measures reasonably stable for most sub-groups Is it sensitive?Is it sensitive?

– Income changes may not be meaningful but global LS Income changes may not be meaningful but global LS may not pick up small effects of policymay not pick up small effects of policy

Is it practical?Is it practical?– Both relatively easy to collectBoth relatively easy to collect

ConclusionConclusion

Using different measures may result in different policies Using different measures may result in different policies

No single measure is ever likely to satisfy all criteriaNo single measure is ever likely to satisfy all criteria But well-being measures are used in policy as if they do But well-being measures are used in policy as if they do

Choice really depends on which criteria matter mostChoice really depends on which criteria matter most– Some criteria may be more important in some contextsSome criteria may be more important in some contexts– And there may be various trade-offs between the criteria And there may be various trade-offs between the criteria

We need more conceptual clarity and empirical evidenceWe need more conceptual clarity and empirical evidence But subjective evaluations may well be the way forwardBut subjective evaluations may well be the way forward