What can subjective well-being research tell us about social policy?

1. What can subjective well-being research tell us about social policy? Presentation for the "Measuring subjective well-being meeting“ conference, Firenze, 23rd -24th July 2009 Simon Chapple simon.chapple@oecd.org ELS/SPD, OECD, PARIS

2. What I am going to do:- Consider the implications of the literature on subjective well-being for social policy in three areas: General social policy Family policy Pensions policyBased on a project that the OECD is undertaking in conjunction with the European Union (also considering implications for disability and redistributive policies)

3. General social policy implications

4. Social policy is often about enhancing well-being: What is then well-being?- GDP per capita: increasing income and thereby allowing people to satisfy more of their broadest preferences - Amongst other weaknesses, GDP fails to value leisure time & other non-marketed goods- An alternative is objective social indicator lists (OECD Society at a Glance for an international example) - Who decides what’s in ? Lists of objective outcomes are prescriptive and paternalistic - Nor do lists address the relative importance of the various social outcomes for society

5. So should we replace GDP and objective lists with subjective well-being?- By allowing people to weigh up their market and non-market outcomes, subjective well-being is much more “global” than GDP- Overcomes weighting issues of objective lists- Overcomes paternalism of both GDP and objective lists- Some neo-Benthamites (e.g. Richard Layard) have even suggested that subjective well-being gives us a cardinal social welfare function to maximise

6. General social policy conclusions- A starting point is to take subjective well-being measures as social policy outcomes of equal significance to GDP and lists of objective outcomes- Occam’s razor is an argument in favour of subjective well-being over objective lists- But there will always be multiple objectives of social policy: - Brave New World / false consciousness - procedural matters - justice - fairness, how to weight individual well-being in the SW function

7. Subjective well-being and social policy: The research base is relatively weak“One firm conclusion that can be drawn is that the existing evidence base is not quite as strong as some people may have suggested…This, in addition to the lack of clear evidence on causality, makes it difficult to make clear policy recommendations at this stage” (Dolan et al. 2008, p. 96).

8. Number of published journal articles with “happiness”, “subjective well-being” or life satisfaction in the title, 1980-2008 (EconLit)

9. Against set-point theory- The inter-temporal correlation for a person’s happiness is around 0.3-0.4 over a five year period- Happiness varies between countries according to variations in objective circumstances- Objective events can be shown to influence subjective well-being permanently (e.g. unemployment) or for comparatively lengthy periods of time - But good evidence too of adaption over several years to events like marriage & disability. Debate about whether this is full or partial - There are time trends in happiness or life satisfaction for some countries

10. Changes in life satisfaction over time in selected EU countries (Source: Eurobarometer)

11. Research base: Need for individual fixed effects for cause-effect: But only three current nationally-representative panel data sets- GSOEP (German socio-economic panel)- BHP (British Household Panel)- HILDA (Household Income and Labour Dynamics, Australia)- No subjective well-being question in EU-SILC. Why?

12. Further measurement weaknesses:- Measurements of life satisfaction and happiness exclude most children- Children are about 20% of the EU population- Yet the vast bulk of research has been on the determinants of adult well-being- But children over about age 8 can respond to life satisfaction/happiness questions

13. Family policy

14. Is Family generally important for subjective well-being?-Yes. Four subjective domains matter for global happiness or life satisfaction.- These domains are family, financial, health and work.- Family effects are typically amongst the strongest of the four- People are more likely to rate their satisfaction with family highly compared to the other three main domains- But the extent to which variation in the “Big Four” accounts for variation in subjective well-being is limited

15. Does marriage make people satisfied with life? Fixed effects results from Clark et al. 2008 & Angeles 2009 as standardised effects sizes, solid squares are statistically significant at a 5% level

16. Do children make people satisfied with life? The importance of individual fixed effectsBritish Household Panel, Angeles 2009

17. Does having children make people satisfied with life? The impact of childbirth Fixed effects from Clark et al. 2008, Angeles 2009, Solid squares indicate 5%> statistical significance

18. Married women having a child are more satisfied with life (British Household Panel, Fixed effects, Angeles 2009)

19. Family policy summary- Families are the most important social environment for happiness- Promote marriage in the United Kingdom?- Encourage serial marriage to get the temporary marriage highs in Germany?- The reality is that we know little about how to increase happiness via influencing the family as an environment

20. Pensions policy

21. “Reported happiness is high among those who are married, on high income, women, whites, the well-educated, the self-employed, the retired, and those looking after the home. Happiness is apparently U-shaped in age (minimizing around the 30s).” Andrew Oswald

22. Life satisfaction and age in Germany to age 95 Standardised effect sizes from Gwozdz and Sousa-Posa 2009)

23. Life satisfaction and age in Germany and Britain to age 65 Standardised effect sizes from Gwozdz and Sousa-Posa 2009 & Clark 2007

24. Raw relationships in 11 European countries and the USA between age and life satisfaction from surveys of older people

25. Children are generally the happiest age groupAverage child less adult life satisfaction, from Healthy Behaviour in School Age Children 2005/6 (ages 11-15) and Gallup 2006 (age 18>)

26. Pensions policy summary- We should have a strong older-old age focus in social policy (The stylised U-shape fact gives a false policy pointer)- Policy changes which increase the real value of pensions have little impact on happiness (UK, Canada), whereas changes which advance the timing of retirement may have a positive effect (Denmark)- Policy changes which reduce entitlements may reduce well-being, especially those who are just included in the reform (De Grip et al. 2009)

27. Encouraging social policy informed by subjective well-being- Give subjective well-being measures a high profile in social monitoring- Policy-wise, the state of research means we need to be in it for the long haul- Encourage regular collection in EU-SILC from adults & children from age 8 years- Encourage comparative UK/Germany research using both BHP and GSOEP- Encourage regular collection of subjective well-being data in each wave of EU-SILC- Encourage more direct policy assessment of the sort undertaken by Pezzini (2005), Economic Journal, using natural experiments from social policy changes- Engage more directly with policy-makers at all levels, many of whom are extremely sceptical, on the strengths and limitations of subjective well-being measures

28. THE END!