A Measure Whose Time has Come: Formalizing Time Poverty

Poverty remains a primary public policy issue, and a large literature has discussed the limitations of an income poverty measure. Using income as an indicator of poverty is a helpful simplification designed to capture ability to meet consumption needs. We argue that time is a basic economic resource allocated to create well-being along with income. Time is a scarce resource that individuals and households must allocate to produce goods, obtain services, and pursue rest and relaxation. Time poverty has been proposed as a complement to income poverty, yet it remains a relatively unknown measure in both policy and research spheres. The many ways time poverty is conceptualized and measured across studies has limited its adoption. To help familiarize readers with time poverty, we apply basic tenets of income poverty measurement to time. We conduct a survey of the theoretical and empirical literature discussing similarities, differences, and the pros and cons of different approaches to time poverty. In particular, inconsistent definition and categorization of necessary and discretionary time has been a barrier to the transparent application of time poverty in the literature, and we outline guidance on defining necessary and discretionary time for future studies. Finally, we outline future research directions for time poverty.     

Life Expectancy as an Objective Factor of a Subjective Well-Being

The paper has two parts. In the first part we offer a definition of well-being which makes life expectancy an explicit variable. We recognize the importance of happiness as a significant aspect of any definition of well-being, but we side-step the issue of what determines its level or how to measure it, and concentrate instead on the consequences of our new variable, life expectancy. We argue that life is valued for its quality, and, if positive, its extension is an improvement of well-being. From this we show how, given certain assumptions, disparate problems that have moral and/or social significance can be approached from the perspective of improving well-being. We close the first part by showing that our definition has enough flexibility to be used for that class of decisions which require tradeoffs between quality of life (happiness) and life expectancy. As a corollary we show that attitudes toward risk depend on expectations, and on some occasions, age itself. In the second part we argue, first, that real economic factors, not reducible to mere psychological ones, may still offer an adequate explanation for the fact that absolute income and happiness do not always correlate well. However, we take no position on the many controversies, such as whether it is relative or absolute increases in wealth that bears most directly on changes in happiness. We confirm through statistical analysis (simple regressions) the well established influence that absolute income has on life expectancy, and, hence, by inference and definition, we argue that this must also be the case with well-being. Secondly, we find through statistical analysis that healthcare has as much impact on life expectancy as does absolute income, leading us to theoretically examine the appropriate income cost for access to healthcare if life expectancy is to improve. And thirdly, by assuming a homogeneous function of life expectancy, we theoretically show how a market oriented healthcare system can exacerbate inequities in life expectancy, and so on well-being. Lastly, we consider some policy implications of those inequities.     

Measures of economic well-being as predictors of psychological well-being

This research indicates that a comprehensive measure of economic well-being based on permanent income, annuitized net worth, and household economic demands, performs better as a predictor of psychological well-being than conventional measures of economic well-being, particularly current reported income. Statistically, the results are significant yet the percentage of psychological well-being variance explained by the measures of economic well-being is very small. The average level of happiness varied only a small amount across quintile categories of each of the measures of economic well-being. That is to say, a substantial number of respondents in the lowest and next lowest quintiles of the measures of economic well-being expressed as high a level of happiness as respondents in the upper two quintiles of economic well-being.This research was funded by a grant from the National Institutes of Health/Mental Health #MH41783-02.     

Ecological Economic Policy for Sustainable Development: Potentials and Domains of Intervention for Delinking Approaches

Due to the increasing environmental problems, conventional environmental policy will not suffice to secure a development path that can be sustainable on a global scale. This article establishes a conceptual framework for general strategies to reach the goals of ecological sustainability and individual well-being. Environmental impact, material input, income/production, the amount of services utilised, and well-being are the fundamental elements of this framework and their linkages are highlighted as possible targets of ecological economic policy. It is clear that current environmental policies, based on a rather narrow, reductionist view of the man-nature relationship, will not suffice. We investigate under which conditions a de-linking of individual well-being from environmental impacts can be achieved; a dramatic dematerialisation of the industrialised economies turns out to be a crucial element. This dematerialisation, we argue, can be achieved only putting a limit to quantitative economic growth, but nevertheless without decreasing the individual well-being, by concentrating the attention on highly valuable eco-efficient services rather than on the production/acquisition of material goods.     

Economic Theory and Subjective Well-being: Mexico

Several studies have been conducted on the topic of well-being. Most of them, however, have been done in industrialized countries where income is distributed relatively more equitatively and the population tends to be more homogeneous. This paper studies the relationship between subjective and economic well-being in Mexico, a country where the economic differences among the population are more clearly marked.

According to the economic definition of well-being, higher levels of income are associated with higher levels of well-being through greater levels of material consumption. Taking into consideration this definition, it is worth asking just how important income is for an individual's happiness?Existing studies in psychology have found a positive correlation between economic well-being (socioeconomic status) and subjective well-being (happiness). However, this positive relationship is weak and a large percentage of human happiness remains unexplained.

Although the mentioned studies make a good approximation of the existing relationship between income and happiness, the characteristics or specification of the function that generates the relationship between these two variables is often assumed to be linear and positive. The main objective of this paper is to investigate further the relationship between subjective and economic well-being. In this study different specifications and approaches are used to approximate the relationship between these variables.

An empirical analysis is made from the results of a survey conducted in two Mexican cities. The investigation studies the impact of demographic, social, and economic variables on subjective well-being in Mexico. Several hypotheses are tested to identify the relationship between household income and individual well-being. It is found that income does not have a strong influence on neither well-being nor on the probability of happiness. However, people tend to overstress the impact that additional income would have on their subjective well-being. This fact could explain the importance that people place on increasing their income level, and it could possibly explain the relative sense of dissatisfaction once a higher income level is achieved.

The relationship between income and the sense of basic need satisfaction is also explored. A main assumption in economic theory suggests the existence of a direct relationship between these variables; however, empirical results show this relationship to be extremely weak. Results indicate that subjective well-being is positively related to the sense of basic need satisfaction but not to income.

     

Human Capabilities Versus Human Capital: Guaging the Value of Education in Developing Countries

The purpose of this study is to defend the view that education should be evaluated in terms of the capability to achieve valued functionings, rather than mental satisfaction or resources. In keeping with Amartya Sen’s capabilities approach we argue that mental satisfaction provides an inaccurate metric of well-being because of the phenomenon of adaptive preferences. Equally, resources cannot be used as a metric of well-being because of inequalities in the ability to convert income and commodities into valued functionings. Hence, interpreting education as a means to create human capital is also impoverished because it evaluates education solely in terms of the accumulation of resources. In order to provide evidence in support of the human capabilities approach we statistically examine the channels through which educational attainment affects the health functionings implied by life expectancy. Using panel data analysis for 35 developing countries for the years 1990, 1995 and 2000 we compare the health functionings (as indicated by life expectancy) that are achieved by the income growth generated by educational attainment, with the total health functionings that are achieved by educational attainment. We find that educational attainment (as indicated by average years of schooling) has a significant effect on life expectancy independently of its effect by way of income growth. A 1% increase in per capita income increases life expectancy by 0.073954% while a 1% increase in average years of schooling directly increases life expectancy by 0.055324%. Because it shows that income underestimates the health functionings achieved by educational attainment, our empirical findings lend support to the claim that the value of education should be measured in terms of the capability for functioning, rather than resources.     

The Impact of Food Price Inflation on Subjective Well-being: Evidence From Urban Ethiopia

The world has experienced dramatic food price inflation in recent years, which sparked social unrest and riots in various developing countries. In this paper, we use a novel approach to measure the impact of food price inflation on subjective well-being of urban households in Ethiopia, a country which exhibited one of the highest rates of food price inflation during 2007–2008. Using an ordered probit regression, we show that being negatively affected by a food price shock reduced subjective well-being of households significantly, although the economy was growing rapidly. We also show that relative standing has a large negative effect on subjective well-being of respondents. The fact that rapid economic growth was accompanied by a decline in citizens’ average reported level of life satisfaction brings its pro-poorness into question. We argue that controlling the rise in food price and ensuring that economic growth trickles down to the average urban citizen would enhance welfare significantly.     

Reference Groups and Pensioners’ Subjective Economic Well-Being in Europe

This study contributes to the interdisciplinary debate over the effects of absolute and relative income on subjective well-being by introducing country-level measures of income into the analysis of pensioners’ economic well-being. Both the relevance of alternative reference groups for different phases of old age, measured through median incomes, and the effect of general income inequality within countries are explored. Analyses are based on the cross-sectional components of the survey European Union Statistics on Income and Living Conditions from 2005 to 2011, containing information on 458,769 pensioners from 31 European countries. With the multilevel linear regression analysis method, the effects of different income measures are analyzed both at the individual and country levels. The main result shows that the average income level of pensioners within countries hold spillover effects strong enough to conclude other pensioners constitute a relevant reference point. Pensioners’ high income level decreases individual income adequacy regardless of age. Results also indicated the labour market group having varying effects on different age groups. The general income inequality does not affect pensioners’ subjective economic well-being.     

Income Inequality and its Consequences for Life Satisfaction: What Role do Social Cognitions Play?

While it is generally agreed that income inequality affects an individual’s well-being, researchers disagree on whether people living in areas of high income disparity report more or less happiness than those in more equal environments, thereby indicating the need to study how and why income inequality matters to the individual’s well-being. Findings on group-specific reaction patterns to income inequality further fuel this need. Alesina et al. (2004) argue that a preference for inequality and the perception of the possibility of social mobility account for the indistinct relationship between income inequality and subjective well-being. Combining this hypothesis with previous research on social cognition and drawing on social justice theory, this paper aims to demonstrate the mediating nature of perceptions of income inequality. It argues that the perceived legitimacy of distributive outcomes and procedures contributes to how income inequalities affect individuals and their sense of well-being. The empirical analysis is based on data from the International Social Justice Project, developed from face-to-face interviews with a representative sample of the German population. Using structural equation modeling, the paper finds structural biases in the perception of income inequality. The paper concludes that subjective well-being is a product of the individual’s perception and legitimating processes. The results indicate that social cognition is a useful tool for studies of income inequality and subjective well-being.     

Relative Economic Position and Subjective Well-Being in a Poor Society: Does Relative Position Indicator Matter?

Concern for relative income (or status in general) may have important implications for poverty and individual well-being. This paper examines the impact of relative economic position on individual’s level of well-being among poor communities in rural Ethiopia. The analysis uses a self-reported measure of overall life-evaluation as a measure of individual well-being. Despite the fact that well-being is multidimensional, the impact of non-money metric measures of relative economic position on individual well-being has not been given a lot of attention in the literature. In this study, relative economic position is measured using consumption data, asset index, and respondent’s own perception of relative wealth. The asset index captures the non-monetary dimensions of economic welfare, including education, physical assets, and social capital. We use data from the 2004 and 2009 waves of the Ethiopia Rural Household Survey and employ a multilevel modelling technique to account for individual and group level heterogeneity in our empirical analysis. We find no significant relationship between individual well-being and relative economic position measured with in consumption terms. In contrast, we do find a significant negative impact of relative position on individual well-being when we use asset indices and respondent’s own perception of relative wealth to measure relative economic position. Our findings suggest that when individuals compare themselves with others, they evaluate various aspects of their life, including their financial conditions, asset holdings, and social relations, which are hardly captured by consumption or income data in many poor countries.     

How have American baby boomers fared? Earnings and economic well-being of young adults, 1964–1987

For American baby boomers, altered demographic behavior has been the key to transforming adverse labor market conditions into favorable living levels. The economic well-being of baby boomers is, on average, higher than that of their predecessors, because they are disproportionately remaining single, having fewer children, doubling up with others, forming unmarried couple unions, and coupling mother's work with childbearing. In the 1980s, baby boomers share in common with all cohorts an increase in income inequality. In contrast to the findings on average income, demographic changes had little effect on the trend in inequality of economic well-being compared with that in earnings.An earlier version of this paper was presented at the annual meeting of the Population Association of America, Toronto, Canada, May 3, 1990. The authors are grateful to Donna Hokoda for excellent assistance and to the University of Southern California for financial support. Support for Easterlin was also provided by a Guggenheim Fellowship, 1988–1989. The uniform file prepared by Mare and Winship (1985) was used for the 1965 Current Population Survey data reported here.     

Does National Income Inequality Affect Individuals’ Quality of Life in Europe? Inequality,Happiness, Finances,and Health

This paper analyses the effect of income inequality on Europeans’ quality of life, specifically on their overall well-being (happiness, life satisfaction), on their financial quality of life (satisfaction with standard of living, affordability of goods and services, subjective poverty), and on their health (self-rated health, satisfaction with health). The simple bivariate correlations of inequality with overall well-being, financial quality of life, and health are negative. But this is misleading because of the confounding effect of a key omitted variable, national economic development (GDP per capita): Unequal societies are on average much poorer (r = 0.46) and so disadvantaged because of that. We analyse the multi-level European Quality of Life survey conducted in 2003 including national-level data on inequality (Gini coefficient) and economic development (GDP) and individual-level data on overall well-being, financial quality of life, and health. The individual cases are from representative samples of 28 European countries. Our variance-components multi-level models controlling for known individual-level predictors show that national per capita GDP increases subjective well-being, financial quality of life, and health. Net of that, the national level of inequality, as measured by the Gini coefficient, has no statistically significant effect, suggesting that income inequality does not reduce well-being, financial quality of life, or health in advanced societies. These result all imply that directing policies and resources towards inequality reduction is unlikely to benefit the general public in advanced societies.     

Income and “Outcomes” for Elderly: DO the Poor have A Poorer Life?

The objective of this paper is to analyze the relationship between income and living conditions and well-being of elderly. The best from two worlds is used for this purpose: a Danish survey covering 1440 elderly aged 72 and 77 from 1997, connected to reliable register information on income, 1988–1996. Indicators of physical activity, social and solitary activities, social contact, functional capability, loneliness and psychological well-being are constructed from the survey. Ordered logistic models are estimated controlling for demographics, education, previous occupation and whether the elderly are still working. It is found that elderly with low income levels have poorer functional capability, lower physical activity and poorer psychological well-being whereas social contact and social activities show no relationship with income. The relationship with income vanishes for solitary activities and loneliness when adding control variables. Having established that robust relations exist between income and some measures of well-being of elderly, we turn to an investigation of causality. Simultaneous models are estimated to assess whether the income relationship can be causally interpreted for functional capability and physical activity. The results show that it cannot be rejected that the income effects are causal, although care should be taken when interpreting results. We finally address our findings in the light of current and future changes regarding the size and economic well-being of the elderly population.     

An economic model of subjective well-being: Integrating economic and psychological theories

This paper compares theories of well-being/welfare in economics and psychology. It suggests that economists have an appropriate conceptual framework but the wrong variables for explaining well-being, whereas psychologists have a confusing framework but appropriate variables. A framework derived from “the new home economics” (Becker, 1965, 1973, 1977; Lancaster, 1966; Justeret al., 1985; Pollak and Wachter, 1975), and especially from the work of F. Thomas Juster and his colleagues, is proposed for the purpose of integrating economic and psychological variables into an account of human well-being. Essentially the framework calls for investigation of the impact of a household's economic and psychological stocks (capital account) on the psychic income flows (current account) and overall well-being of its members. It is suggested that this framework is valuable for clarifying individual and household decisions as well as for explaining variance in well-being. Empirical assessment of existing frameworks and an illustration of how the proposed framework could be implemented are made with data drawn from a 5-wave Australian Quality of Life Panel Survey.     

Economic Migration and Happiness: Comparing Immigrants’ and Natives’ Happiness Gains From Income

Research on happiness casts doubt on the notion that increases in income generally bring greater happiness. This finding can be taken to imply that economic migration might fail to result in increased happiness for the migrants: migration as a means of increasing one’s income might be no more effective in raising happiness than other means of increasing one’s income. This implication is counterintuitive: it suggests that migrants are mistaken in believing that economic migration is a path to improving one’s well-being, at least to the extent that well-being means (or includes) happiness. This paper considers a scenario in which it is less likely that migrants are simply mistaken in this regard. The finding that increased incomes do not lead to greater happiness is an average (non)effect—and migrants might be exceptional in this regard, gaining happiness from increased incomes to a greater extent than most people. The analysis here, using data from the World Values Survey, finds that the association between income and happiness is indeed stronger for immigrants in the USA than for natives—but even for immigrants that association is still relatively weak. The discussion then considers this finding in light of the fact that immigrants also report lower levels of happiness than natives after controlling for other variables.     

The Effect of Income on General Life Satisfaction and Dissatisfaction

Increasing evidence from the empirical economic and psychological literature suggests that positive and negative well-being are more than opposite ends of the same phenomenon. Two separate measures of the dependent variable may therefore be needed when analyzing the determinants of subjective well-being. We investigate asymmetries in the effect of income on subjective well-being with a single-item measure of general life satisfaction. Using data from the German Socio-Economic Panel 1984–2004, and a flexible multiple-index ordered probit panel data model with varying thresholds, we find that income has only a minor effect on high satisfaction but significantly reduces dissatisfaction.     

Money Buys Financial Security and Psychological Need Satisfaction: Testing Need Theory in Affluence

The most prominent theory to explain the curvilinear relationship between income and subjective well-being (SWB) is need theory, which proposes that increased income and wealth can lead to increased well-being in poverty because money is used to satisfy basic physiological needs. The present study tests the tenets of need theory by proposing that money can buy happiness beyond poverty if the money satisfies higher-order needs. Findings indicate that in older adults (n = 1,284), as economic standing rises, so do individual perceptions of financial security (a safety need), which in turn increases overall life satisfaction. Further, a path model tested the degree to which financial security and psychological need satisfaction mediated the path from economic standing to life satisfaction and demonstrated the complete mediation through higher-order needs—there was a 66% reduction in the direct link through financial security and a 34% reduction through psychological need satisfaction. Discussion focuses on how these mediation and path models extend need theory.     

American families: policy issues

"Increases in the number of children living in single-parent (usually female-headed) households and in the proportion of mothers who work outside their homes have raised concern in the United States about the effects of these trends on the well-being of children and the possible need for policy intervention. This paper discusses the arguments for and against policies that affect families. We review a number of such policies and what research suggests about their likely effects. The policies discussed...include those concerning child support, welfare, income taxes, child and dependent care, family leave, family planning, programs to improve parenting skills and family function, and economic growth."     

Income and Happiness in Time of Post-Communist Modernization

This paper discusses the relations between economic development, family income, and happiness in post-communist Poland from the point of view of Inglehart’s theory of modernization. The happiness is understood as satisfaction with income and life, and as psychological well-being. The analysis of survey data yields the conclusion that economic development reduces the strength of the relations between income and satisfaction as well as between income and psychological well-being. These findings may be explained by changes in the value system from collectivist/materialist to individualist/post-materialist, even when these values are not directly measured. The analyzed data are from a series of representative surveys conducted in Poland during a period of political and economic transformation (i.e., between 1989 and 2008). Official statistical data on Polish economic development during the same period are used as a background for survey results. The relations between income and happiness change in Poland in a way consistent with Inglehart’s modernization theory.