Social Indicators Research

, Volume 28, Issue 2, pp 97–116 | Cite as

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

  • Bruce Headey
Article

Abstract

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.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Abbey, A. and Andrews, F. M.: 1985, ‘Modelling the psychological determinants of life quality’, Social Indicators Research 16, 1–16.Google Scholar
  2. Alwin, D. F. and Hauser, A. M.: 1975, ‘The decomposition of effects in path analysis’, American Sociological Review 40, 37–47.Google Scholar
  3. Andrews, F. M. and Withey, S. B.: 1976, Social Indicators of Well-Being, (Plenum, New York).Google Scholar
  4. Argyle, M.: 1987, The Psychology of Happiness (Methuen, London).Google Scholar
  5. Becker, G.: 1965, ‘A theory of the allocation of time’, Economic Journal 75, 493–517.Google Scholar
  6. Becker, G.: 1973, ‘A Theory of Marriage: Part 1’, Journal of Political Economy 81, 813–846.Google Scholar
  7. Bradburn, N. M.: 1969, The Structure of Psychological Well-Being (Aldine, Chicago).Google Scholar
  8. Campbell, A., Converse, P. E., and Rodgers, W. R.: 1976, The Quality of American Life (Sage, New York).Google Scholar
  9. Costa, P. T., McCrae, R. R., and Arenberg, D.: 1983, ‘Recent Longitudinal Research on Personality and Aging’, in K. W. Schaie (ed) Longitudinal Studies of Adult Psychological Development (Guilford, New York).Google Scholar
  10. Diener, E.: 1984, ‘Subjective well-being’, Psychological Bulletin 45, 542–575.Google Scholar
  11. Diener, E., Emmons, R. A., Larsen, R. J., and Griffin, S.: 1985, ‘The satisfaction with life scale: a measure of life satisfaction’, Journal of Personality Assessment 49, 71–75.Google Scholar
  12. Diener, E., Larsen, R. J., Levine, S., and Emmons, R. A.: 1985, ‘Intensity and frequency: dimensions underlying positive and negative affect’, Journal of Personality and Social Psychology 48, 1253–1265.Google Scholar
  13. Eysenck, H. J. and Eysenck, S. B. G.: 1964, Manual of the Eysenck Personality Inventory (Stoughton, London).Google Scholar
  14. Eysenck, H. J. and Eysenck, S. B. G.: 1969, Personality Structure and Measurement (Routledge & Kegan Paul, London).Google Scholar
  15. Hanushek, E. A. and Jackson, J. E.: 1977, Statistical Methods for Social Scientists (Academic Press, New York).Google Scholar
  16. Headey, B. W.: 1988, ‘The Life Satisfactions and Priorities of Australians’, in J. Kelley and C. Bean (eds) Australian Attitudes: Social and Political Analysis from the National Social Science Survey, (Allen & Unwin, Sydney).Google Scholar
  17. Headey, B. W., Holmstrom, E. L., and Wearing, A. J.: 1982, Australians' Priorities, Satisfactions and Well-Being: Methodological Issues (Melbourne University, Melbourne).Google Scholar
  18. Headey, B. W., Holmstrom, E. L., and Wearing, A. J.: 1984, ‘Well-being and ill-being: different dimensions?”, Social Indicators Research 14, 115–139.Google Scholar
  19. Headey, B. W., Holmstrom, E. L., and Wearing, A. J.: 1985, ‘Models of well-being and ill-being’, Social Indicators Research 17, 211–234.Google Scholar
  20. Headey, B. W. and Wearing, A. J.: 1987, ‘Chains of well-being, chains of ill-being’, International Conference on Subjective Well-Being, Werner-Reimers-Stiftung Foundation, Federal Republic of Germany, July 8–11.Google Scholar
  21. Henderson, S., Byrne, D. G., and Duncan-Jones, P.: 1981, Neurosis and the Social Environment (Academic, New York).Google Scholar
  22. Holmes, R. H. and Rahe, R. H.: 1967, ‘The social readjustment rating scale’, Journal of Psychosomatic Research 11, 213–218.Google Scholar
  23. Holmstrom, E. L.: 1985, ‘Women's time, men's time: what we say and what we do’, ANZAAS Festival of Science, Monash University, August 26–30.Google Scholar
  24. Janis, I. L. and Mann, L.: 1979, Decision Making (Free Press, New York).Google Scholar
  25. Juster, F. T. and Courant, P. N.: 1986, ‘Integrating Stocks and Flows in Quality of Life Research’ in F. M. Andrews (ed) Research on the Quality of Life (I.S.R., Ann Arbor).Google Scholar
  26. Juster, F. T., Courant, P. N., and Dow, G. K.: 1985, ‘A Conceptual Framework for the Analysis of Time Allocation Data’, in F. T. Juster and F. P. Stafford (eds) Time, Goods and Well-Being (I.S.R., Ann Arbor).Google Scholar
  27. Juster, F. T. and Land, K. C.: 1981, Social Accounting Systems (Academic, New York).Google Scholar
  28. Kim, J. O.: 1975, ‘Multivariate analysis of ordinal variables’, American Journal of Sociology 81, 261–298.Google Scholar
  29. Lancaster, K. J.: 1966, ‘A new approach to consumer theory’, Journal of Political Economy 74, 132–157.Google Scholar
  30. Larsen, R. J., Diener, E., and Emmons, R. A.: 1985, ‘An evaluation of subjective well-being measures’, Social Indicators Research 17, 1–18.Google Scholar
  31. Moos, R. H., Cronkite, R. C., Billings, A. G., and Finney, J. W.: 1984, Health and Daily Living Form (Stanford University, Stanford).Google Scholar
  32. Pollak, R. A. and Wachter, M. L.: 1975, ‘The relevance of household production function and its implications for the allocation of time’, Journal of Political Economy 83, 255–277.Google Scholar
  33. Robinson, J. P.: 1977, How Americans Use Time (Praeger, New York).Google Scholar
  34. Ruggles, R.: 1981, ‘The Conceptual and Empirical Strengths and Limitations of Demographic and Time Based Accounts’, in F. T. Juster and K. C. Land (eds) Social Accounting Systems (Academic, New York).Google Scholar
  35. Sarason, I. G., Levine, H. M., Basham, R. B., and Sarason, B. R.: (1983), ‘Assessing social support: the social support questionnaire’, Journal of Personality and Social Psychology 44, 127–139.Google Scholar
  36. Scitovsky, T.: 1976, The Joyless Economy (Oxford University, Oxford).Google Scholar
  37. Sen, A.: 1987, The Standard of Living (Cambridge University, Cambridge).Google Scholar
  38. Szalai, A.: 1972, The Use of Time (Mouton, The Hague).Google Scholar

Copyright information

© Kluwer Academic Publishers 1993

Authors and Affiliations

  • Bruce Headey
    • 1
  1. 1.Pol. Science Dept.University of MelbourneParkvilleAustralia

Personalised recommendations