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National Well-Being Indices Professor Liam Delaney
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“Not fluffy”
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Overview
Well-Being and Economics
Concepts of Well-Being
20th Century Ireland
National Well-Being Indices
Considerations and Limitations
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2 - Historical Background (1)
Schumpeter (1953) traces utility theory from Aristotle through the medieval scholastics through to Smith, Bernoulli, Walras (rarete), Jennings and Lyod.
Jevons: “Economics as a calculus of pleasure and pain”. Marshall: “Hedonics”.
Generally assumed that utility was linear but this was not always the case and began to be relaxed.
Very strong European interest at the turn of the 20th century in integrating newly emerging psychological theories in to economics particularly psychophysics (e.g. Fechner).
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Historical Background (2)
Strong interest in issues such as the interpersonal comparison of utility particularly with regard to progressive taxation.
However, became gradually apparent that what was taking place was a logic of utility rather than a psychology of utility.
Friedman (1952) and other work e.g. Samuelson put a number of nails in the coffin of directly analysing utility.
Many of the issues did survive as critiques of welfare economics. Ng (2003), Harsanyi (1997)
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Modern Hedonic Economics
The quantitative analysis of measured hedonic experience has a long past.
Has recently been “discovered” by economics. Strongly associated with the work of Kahneman,
Frey, VanPraag, Clark, Blanchflower, Oswald and others.
Review by Layard (2005). See Van-Praag and Ferrer-I-Carbonell (2004) for a
more Euro-centric perspective. Strong links with Psychology and Neuroscience.
(Glimshcer and Rustichini 2004).
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Well-being and Economics
Historical concern with utility
Modern debate
Easterlin Paradox
Well-Being functions
Loss Aversion
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Benefits of GDP/GNP
Comparable
Linked to core economic parameters
Okun's law
Debt Dynamics
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Limitations of GDP/GNP
Household Production
Inequality
Public Goods/Externalities
Non-Market Goods
Environmental sustainability
Consumption and PPP
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Concepts of Well-being
Consumption and Income
Happiness
Life Satisfaction
Flow measures of Utility
Functioning
Eudemonia
Capabilities
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Flow Measures of Well-Being
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Stress:-Public Transport V Driving http://www.stressmapping.com/
Liam Delaney, Michael Daly, Gerard O Neill
Red= driving
Green= Public
Transport
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Fogel on Development of Societies
Stage 1: Death is linked to an endemic shortage and uncertainty of food
Stage 2: Prevention of death from infectious illness becomes key
Stage 3: Increasing control over acute causes of death and increasing life expectancies and medical advancements
Transitions between stages
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20th-Century Ireland
5 major collapses
Declines in infant mortality in 40s
Increases in Life Expectancy
High out-migration
High variances in childhood conditions
Current trough following boom
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Source O’Grada 2010
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Irish Infant Mortality
0
10
20
30
40
50
60
70
80
90
19
21
19
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23
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24
19
25
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Rate per 1000
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Life Expectancy in Ireland
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Mean scores on psychological distress index (1994-2001)
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Suicide rates per 100,000 by gender
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Male suicide rates by age group
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Determinants of Well-being
Unemployment
Childhood mistreatment
Social isolation
Chronic Pain
Relationship
Fixed effects
Income
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Income
Huge historical debate
Easterlin Paradox
Wolfers and Stevenson
Easterlin and Angelescu
Diminishing Returns?
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Intertemporal Factors
Intergenerational Welfare
Childhood determinants of well-being
Scarring effects
Disruptive life events
Chain effects
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Evaluable or Inherently Inevaluable
Hsee (2008)
One solution to Easterin Paradox
Inherently Evaluable Goods relate to core well-being
Consistent with increased happiness between rich and poor and why rich do not get happier over time
Not just limited to poor countries
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Inherently Evaluable Goods
“Inherently evaluable attributes are those for which we have an innate, typically visceral and biological scales to judge desirability. Examples include the amount of sleep, severity of pain or allergies, stress from work, ambient temperature, degree of social isolation (loneliness), etc., In contrast, inherently inevaluable attributes are those for which we do not have an innate evaluation scale to assess desirability – to evaluate these attributes, we must instead rely on external reference information or socially learned norms. Examples include the size of a diamond, the amount of income…”
(Hsee et al 2008, p 228).
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Macro-Considerations
Inflation less aversive than unemployment
Inequality
Financial Crises
Less known about balance sheets
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Irish Literature
Newman, Delaney, Nolan (2008): increases in financial satisfaction through Celtic Tiger
Delaney et al (2008): determinants of WHO-5
ESRI - The Best of Times
Delaney (2009): well-being through late 20th century Ireland
Walsh (2012): well-being after the fall
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National Well-being indices
GDP/GNP
Stiglitz-Sen Commission
Life Satisfaction Rankings
Happiness Rankings
OECD Better Life
Human Development Index
Gallup
ONS
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Stiglitz-Sen Recommendations
Income/Consumption rather than production
Households
Wealth and distribution
Subjective dimensions
Inequalities
Surveys to assess linkages
Role of statistical offices
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Ireland in Well-Being Indices
Highly ranked on GDP/GNP
Life expectancy convergence though with long lags
Consistently among highest in well-being and life satisfaction
7th in Human Development Index
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5.325.48
6.016.036.09
6.266.416.466.486.496.556.65
6.756.816.89
7.157.157.17
7.427.447.507.537.57
7.737.737.797.837.877.948.028.02
8.328.47
0 .5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.5 6 6.5 7 7.5 8 8.5 9
mean of happiness
BulgariaUkraineTurkey
Russian FederationRomaniaHungary
LatviaItaly
SlovakiaGreece
PortugalEstonia
Czech RepublicCroatiaPolandFrance
GermanySlovenia
IsraelUnited Kingdom
AustriaSpain
CyprusNetherlands
BelgiumIreland
LuxembourgSwedenNorway
SwitzerlandFinland
DenmarkIceland
Overall Mean Happiness for the Year 2002 - 2010
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4.244.58
5.405.55
5.675.885.89
6.046.066.10
6.246.30
6.406.456.50
6.846.866.87
7.067.08
7.197.24
7.427.467.507.58
7.807.817.85
7.968.01
8.458.46
0 .5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.5 6 6.5 7 7.5 8 8.5 9
mean of lifesatisfaction
UkraineBulgaria
Russian FederationHungaryPortugal
LatviaTurkey
SlovakiaRomania
GreeceEstoniaFrance
Czech RepublicCroatiaPoland
GermanyItaly
SloveniaUnited Kingdom
IsraelCyprus
SpainBelgium
IrelandAustria
NetherlandsNorway
LuxembourgSwedenFinland
SwitzerlandDenmark
Iceland
Overall Mean Life Satisfaction for the Year 2002 - 2010
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Mean-levels of well-being across countries
UAEEHUPTGBGRSKCZSIFIPLDEATFRNLESBESEISLUNOCHIEDK
0 5 10 15 20mean of who5
UAEEHUPTGBGRSKCZSIFI
PLDEATFRNLESBESEIS
LUNOCHIE
DK
Subjective Well-Being By Country
Source: Delaney et al 2009
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Gallup Index
When sorted according to the percentage of inhabitants who are 'thriving', Ireland comes 10th out of 40,
Behind Denmark, Finland, Norway, Sweden, Netherlands, Switzerland, Austria, Belgium and the United Kingdom.
In Ireland, 49% are thriving, 49% are struggling, 2% are suffering, and the score for daily experience is 7.5
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UN Happiness Report
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Annual samples of 1,000 respondents in more than 150 countries. Respondents evaluate their quality life on an 11-point ladder scale (Cantril ladder).
The report gathers the responses from Gallup World Polls, from 2005 to 2011, and weights them by each country’s population. Ireland comes 10th in the world based on this measure.
Using the Gallup World Poll (Cantril ladder)
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Happy Index
Country rankings based on the 4-point evaluative happiness answers in the combined World Values Survey/European Values Survey
Ireland comes sixth on this combined measure.
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Average happiness yesterday
Average Gallup World Poll answers to a question asking about the respondent’s happiness yesterday (using a yes/no 2-point response scale).
Ireland comes first on this measure.
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Positive affect
Gallup World Poll country rankings for positive affect (the average of yes/no answers on the frequency yesterday of enjoyment, happiness and laughter).
Ireland comes second on this measure.
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Negative affect
Gallup World Poll country rankings for negative affect (the average of yes/no answers on the frequency of worry, sadness, anger and depression).
Ireland is ranked number 27 on this.
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Average net affect
positive affect minus negative affect
Ireland is ranked 3rd on this.
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OECD Better Life Index: Ireland (indicators)
Housing expenditure: 4/36
Dwelling with basic facilities: 99.80% = 10/36
Rooms per person: 2.1 = 5/36
Household financial wealth: 21485 USD = 22/36
Household net adjusted disposable income: 24156 USD = 16/36
Job security: 10/36
Long-term unemployment rate: 6.69% = 33/36
Employment rate: 60% = 26/36
Quality of support network: 98% = 2/36
Years in education: 17.6 = 17/36
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OECD Better Life Index: Ireland (indicators)
Student skills: 18/36
Educational attainment (% aged 25 to 64 having completed secondary school): 72% = 24/36
Water quality: 89% satisfied = 14/36
Air pollution: 13 micrograms = 3/36
Consultation on rule-making: 9/36
Voter turnout: 67% = 22/36
Self-reported health: 83% good or v.good = 6/36
Life expectancy: 81 years = 11/36
Life satisfaction: 17/36
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OECD Better Life Index: Ireland (indicators)
Homicide rate: 1.2 homicides per 100,000 people = 15/36
Assault rate: 2.63% = 10/36
Time devoted to leisure and personal care: 14.56 hours = 24/36
Employees working very long hours: 3.72% = 10/36
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After the Fall
Set of papers by Brendan Walsh
Evidence for increase in suicide rates
Small change in life satisfaction
Increase in births
Decrease in mortality
Increase in migration
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Source Walsh 2011
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Source Walsh 2011
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Considerations 1
Multi-dimensionality
Differential item functioning
Migration and Well-Being
Means and Variances
Rawlsian Well-Being functions
Quantile Regressions
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Migration
Source: Delaney et al 2013 in press
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Heterogeneous reporting
Analyses of socioeconomic inequities in adult health often rely on self-reported indicators, usually some variant of:
Subjective scales involve evaluation of your own true health compared with your own subjective view of what it means to be above or below a given threshold (such as very good and good)
Response categories may be interpreted in systematically different ways
If there are systematic differences in how different groups of
people interpret responses categories then results using these
responses may be biased
In general, would you say that your health is:
Very good, Good, Fair, Poor, Very poor
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Response Category Cut-point Shift
Very good
Very bad
Good
Bad
Moderate
True Health Response Scale A B C
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Heterogeneous health reporting
5-category SAH instrument “True” health status for each individual, which is unobserved,
represented on a vertical axis with higher points, represented by the red lines, indicating better health
The ranges of true health within which different responses are given to the SAH question vary across individuals (A, B & C) Relative to A, B is more positive and C more negative regarding
their health At the top level of “true” health (top red line) A reports good health,
B very good and C moderate At the middle level of true health, A reports moderate health, B
good and C bad At the lowest level of true health, A reports bad health, B moderate
and C very bad
B is much more optimistic than A or C
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Incomparable Responses Problem
Individuals may report health differently depending their upon
Different understandings or conceptions of health
Expectations for own health
Their health relative to their peers
Different norms or standards as to what the responses
categories mean
Financial incentives to report ill health
This is referred to as differential item functioning or DIF
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Consequences of DIF for equity analyses and indices
If the variation is random, it will not bias the measurement of socioeconomic-related health inequality
Differential reporting of health by socioeconomic status (SES) would bias estimation of the gradient E.g. if the poor systematically understate their true health status,
then self-reported measures of health will not reflect the full extent of health inequalities
For the same ‘true’ (but unobserved) health status, poor may report better health
Differences in health disparities from self-reported and objective health measures suggest systematic variation in reporting
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Evidence of heterogeneous reporting
Income-related inequalities in objective health indicators (malnutrition, mortality), tend to be higher than those in subjective health
Discrepancy in health gradients measured by objective and subjective indicators is even more common in developing world
For example, in developing countries, gradient in reported health often much smaller than gradient in mortality/anthropometrics
Aboriginals self-report better health despite being seriously disadvantaged on objective measures such as mortality
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Examples
India: Amartya Sen (2002): “the state of Kerala has the highest
levels of literacy... and longevity... in India. But it also has,
by a very wide margin, the highest rate of reported
morbidity among all Indian states...
At the other extreme, states with low longevity, with woeful
medical and educational facilities, such as Bihar, have the
lowest rates of reported morbidity in India.”
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Methodology: Anchoring Vignettes
King et al. (2004) proposed anchoring vignettes as a method overcoming the problem of
incomparable responses
How - uses respondent’s evaluations of the health states
of hypothetical people described in a short vignettes as
an anchor for their self-assessed responses (King et al.
2006, Kapteyn et al 2007, van Soest 2007)
Purges these reporting differences from individuals’ evaluations of their own health
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Methodology: Anchoring Vignettes
1. Respondents are first asked to evaluate their health in a given domain on a subjective scale. For example:
In the last 30 days, how much of a problem did you have because of shortness of breath?
None, Mild, Moderate, Severe, Extreme
2. Respondents are then asked to rate the health of one or more hypothetical person described in the vignette on the same scale that they used to rate their own position. For example:
Vignette A: Marie has no problems with walking slowly. She gets out of breath easily when climbing uphill for 20 meters or a flight of stairs. In the last 30 days, how much of a problem did Marie have because of shortness of breath?
Vignette B: Sean has asthma. He enjoys playing football twice or three times per week. He has attacks of wheezing once a month that go away half an hour after taking his medication. In the last 30 days, how much of a problem does Sean have breathing?
None, Mild, Moderate, Severe, Extreme
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Vignette Assumptions
As the objective health situation of the person described in the vignette(s) is the same for all respondents, anchoring vignettes can identify individual variation in subjective thresholds
Vignette equivalence: Assume all respondents recognise the vignette as representing the same dimension of health, thus variation in its evaluation derives only from reporting differences
Response consistency: Assume respondents rate their own health in the same way as the vignette, the common cut-points estimated from the vignette responses can be imposed on the evaluation of own health
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Anchoring Vignettes (King et al. 2004)
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Anchoring Vignettes (King et al. 2004)
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Anchoring Vignettes (King et al. 2004)
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Vignettes and Life Satisfaction
Source Kapteyn et al 2011
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Considerations II
Frequency of Collection
MOT versus Speedometer
Language for use in policy
Well-Being and Mental Health
Well-Being and Behaviour
Paternalism and neo-paternalism
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Considerations III
Ethical basis of consumption
Political economy of measurement
Is well-being a distraction?
Well-Being and productivity
Bank bailouts
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Options for Ireland
Index constructed from ESS
Aging studies - TILDA/SHARE
Regular tracking from CSO through QNHS
Welfare of targeted groups
Migrants into Ireland
Irish abroad
NI Measures
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Extra Slides on Influence on Measures
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US National Well-Being Index
The Gallup-Healthways Well-Being Index
Daily measure of health and well-being in the U.S.
Over 500 adults interviewed every day
Total nterviews: 2012 n = 353,564 and 2011 n = 353,492
Real-time measurement of life-evaluation, emotional health, physical health and health behaviours, work environment
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Daily data
Source: http://www.well-beingindex.com/
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Well being questions: Emotional health
Now, please think about yesterday, from the morning until the end of the day. Think about where you were, what you were doing, who you were with and how you felt. Were you treated with respect all day yesterday? Did you smile or laugh a lot yesterday? Did you learn or do something interesting yesterday? Did you have enough energy to get things done yesterday?
Did you experience the following feelings during A LOT OF THE DAY yesterday? How about enjoyment, physical pain, worry, sadness, stress, anger, happiness? (asked individually)
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Emotional health: 1% drop in recession
Source: http://www.well-beingindex.com/
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Well being questions: Evaluation Index
Please imagine a ladder with steps numbered from 0 at the bottom to 10 at the top. The top of the ladder represents the best possible life for you and the bottom of the ladder represents the worst possible life for you. On which step of the ladder would you say you personally feel you stand at this time?
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Life-evaluation: Substantial drop (approx. 10%)
Source: http://www.well-beingindex.com/