Abstract
Abstract Most of the studies on subjective well-being focus on the determinants of absolute life satisfaction or happiness levels. This paper asks an important but understudied question, namely, could countries achieve the same or even higher subjective well-being by using the same resources more efficiently? We provide the first country panel evidence on whether nations efficiently transform their endowments (income, education, and health) into subjective well-being and which factors influence the conversion efficiency. Using data on 91 countries from 2009 to 2014, we find that that well-being efficiency gains are possible worldwide. We show that poor labor market conditions as proxied by unemployment and involuntary part-time employment are associated with lower ‘subjective well-being efficiency,’ while social support, freedom, and the rule of law improve it. These findings are useful to policymakers in helping identify inefficiencies, reducing wasteful resource use, and developing policies that promote sustainable development and human well-being. Our results are robust to a battery of sensitivity checks and raise policy-relevant questions about the appropriate instruments to improve subjective well-being efficiency.
Highlights
This paper asks an important but understudied question, namely, could countries achieve the same or even higher subjective well-being by using the same resources more efficiently? We provide the first country panel evidence on whether nations efficiently transform their endowments into subjective well-being and which factors influence the conversion efficiency
We show that poor labor market conditions as proxied by unemployment and involuntary part-time employment are associated with lower ‘subjective well-being efficiency,’ while social support, freedom, and the rule of law improve it
Most papers in the so-called Economics of Happiness literature ask the question: what factors enhance or diminish subjective well-being? In our paper, we ask an important but understudied question, namely, could countries achieve the same or even higher subjective well-being by using the same resources more efficiently? While the determinants of absolute subjective well-being levels are well documented (MacKerron 2012), much less is known about how individuals and countries use their resources and endowments to reach given subjective well-being levels
Summary
Subjective well-being measures – comprising assessments of positive and negative emotions, life evaluations, and life purpose – have gained popularity in assessing the non-monetary consequences of different behaviors and events. Most papers in the so-called Economics of Happiness literature ask the question: what factors enhance or diminish subjective well-being? In our paper, we ask an important but understudied question, namely, could countries achieve the same or even higher subjective well-being by using the same resources more efficiently? While the determinants of absolute subjective well-being levels are well documented (MacKerron 2012), much less is known about how individuals and countries use their resources and endowments to reach given subjective well-being levels. Subjective well-being efficiency is, a relative rather than an absolute measure It is useful for policymakers and society because it demonstrates whether countries could achieve their current levels of subjective well-being with fewer resources (Binder and Broekel 2012a). The real value of subjective well-being efficiency analyses for policymakers is in understanding whether and how factors, such as institutions, social norms, and the general socio-demographic composition of the country, help or hinder the conversion of resources into subjective well-being. Such knowledge can help design policies that seek to reduce inefficiencies and empower people to derive satisfaction and meaning from their lives. Even if people living in countries with dysfunctional institutions report high life satisfaction due to adaptation, subjective well-being efficiency analyses can reveal these inefficiencies and point out their sources
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