Abstract
As a result of the disenchantment with traditional income-based measures of welfare, alternative welfare measures have gained increasing attention in recent years. Two of the most prominent measures of well-being come from subjective well-being research and the (objective) capability approach. Despite their promising features, both approaches have a number of weaknesses when considered on their own. This paper sets out to examine to what extent a fusion between both approaches can overcome the weaknesses of both individual approaches. It uses features of the capability framework to enrich what is basically a subjective well-being perspective. Key drawbacks of normative subjective well-being views can be overcome by focussing welfare assessments on “Subjective Well-being Capabilities”, i.e. focussing on the substantive opportunities of individuals to pursue and achieve happiness.
Similar content being viewed by others
Notes
This could be due to the averaging out of any effect in standard regression frameworks, as there is some evidence that education plays a role for individuals in the extremes of the subjective well-being distribution (Binder and Coad 2011b).
There is a danger of paternalism also for SWB views when it comes to policy advice based on the life domains that empirically tend to influence subjective well-being (Qizilbash 2012). If policy-makers and happiness researchers focus on these domains without acknowledging individual heterogeneity in learning likes and dislikes, a subjective well-being view can become paternalistic on this level of the sources of well-being. I will deal with this objection in Sect. 4.
A more fundamental problem is to decide what measure of subjective well-being (affective; cognitive or even broader mental well-being notions) will be relevant to assess welfare. This is a normative question that can only be in small parts influenced by empirical concerns such as data availability. In many respects, those measures give similar results, but this is not the case for all determinants of subjective well-being.
Gasper (2010), p. 358, similarly argues that subjective well-being judgements involve careful deliberation and should not be interpreted as simple meter readings.
The problem exists also with regard to “miserable millionaires” (or “frustrated achievers”, Graham, 2009): how is their misery to be evaluated that exists despite their objectively good situation?
In the empirical measurement, Eq. 2 can also be only measured with imprecision. One could thus ask whether it should not contain an error term similar to Eq. 1. Reporting subjective well-being, however, is imprecise in a different way from just simple measurement error when it comes to empirically measuring some objective quality. For that reason, the error term in the subjective well-being equation seems of a more principal nature than the one that could be added here. When functionings also incorporate subjective assessments such as “being happy”, the same reporting error term would apply here.
Note that selection of some of the conversion functions is part of an individual’s capability to function while, of course, some conversion functions are just not eligible, e.g. being female or male, and thus outside an individual’s control (Sen, 1985a).
One way out of this dilemma would be to focus on “basic functionings” (Sen 1993), for which perhaps a larger consensus might exist.
This is not to say that there are no applications or potential methodologies at all that try to put the capability framework into a dynamic perspective in its empirical application (see, e.g., Hirschberg et al. 2001a, b, for an application of cluster analysis in time series multidimensional welfare analysis). However, the questions of how and why functionings would change over time is not sufficiently well-researched at this moment.
The paucity of progress in actually measuring capabilities is reflected in the fact that most empirical applications measure achieved functioning and interpret this as a proxy for capabilities (Canoy et al. 2010, p. 393). Whether one’s actual achievements are a good proxy of one’s opportunities is not a priori clear.
Should not income also be a happiness-relevant functioning if it makes people happy? The answer to this question depends on whether there exists a direct effect of income on SWB. While the literature on the relation between SWB and income is controversial as to what extent income plays a direct role for subjective well-being, it seems plausible to hold that income is one very important indirect source of subjective well-being through its role for health, education, longevity, nutrition and so on. Whether income would directly influence SWB if one controlled for all indirect effects (such as the ones named, but also through providing status and so forth) might be questioned and should probably be the focus of further research.
Note further that the happiness Eq. (6) might, depending on the concrete purpose, be unpacked further into different domain satisfactions. The vector of functionings then is transformed through the individual’s subjective evaluation into a vector of domain satisfactions. The overall assessment of different domain satisfactions is the individual’s comprehensive assessment r. Given our scant knowledge of how domain satisfactions map into life satisfaction, it will depend on future work how to specify this relationship more precisely. At the present point in time, it can be conjectured that some substantial part of the reporting error \(\epsilon\) in Eq. (1) might stem from the inability of individuals to correctly aggregate one’s satisfaction in important domains of life into an overall measure of life satisfaction.
To use Sumner’s tripartite distinction of nature, sources and indicators of welfare (Sumner 1996): subjective well-being is constitutive of welfare, happiness-relevant functioning achievement are sources of welfare; and indicators of welfare would be whatever measure we find to assess happiness-relevant functioning or subjective well-being with.
Given that economists traditionally tend to believe that this is impossible, there is surprisingly ample evidence that individuals similarly convert response labels into numbers (van Praag 1991), that friends and family can rate one’s subjective well-being quite accurately (Sandvik et al. 1993) and that more objective displays of pleasure and pain can be interpersonally judged with accuracy (Algom and Lubel 1994; Redelmeier and Kahneman 1996).
This also solves the problem of how to attach weights to different functionings. SWB information gives us relevant information on the weights individuals attach to different functionings. A similar point has been argued by Schokkaert (2007), p. 423. The idea behind this is that the coefficients of the determinants of SWB in empirical well-being regressions provide us with empirical knowledge about how strongly each happiness-relevant functioning influences well-being. For example, if we consistently find that coefficients for unemployment are much higher than coefficients for income, one could argue that an appropriate priority should be given to keeping individuals in employment as opposed to increasing the incomes of those who are employed. Emphasis in policy should then be commensurate with the weights of happiness-relevant functionings vis-à-vis each other.
It is doubtful that one list can be justified for once and for all, independent of time and place. It is more plausible that there is a “skeleton list” that offers the basis for a more concrete specification of a full-fledged list of valuable functionings.
Homeostatic processes consist of two subprocesses. First, the organism detects a deviation from “set points” as regards the parameters that are necessary to allow continued functioning of the organism. For instance, the hot summer has increased our body temperature or the hunting for food has dehydrated the organism. Then, mechanisms set in to restore the balance condition in these monitored parameters (so to speak, bring back the organism into equilibrium; set points comprise mostly of parameter ranges, not sharp levels). The organism begins to sweat to reduce body temperature or becomes thirsty to motivate the replacement of lost fluids.
One could also try and use this information as well as the weights provided from typical SWB regressions to try and estimate a subjective well-being rating given a certain happiness-relevant functioning achievement.
It seems that typically SWB measures reflect objective conditions better than in some of the better known exceptional cases like the one discussed here. To what extent SWB measures reflect the objective circumstances of a society or are subject to the adaptation problems is still debated.
The same rationale applies for the miserable millionaires case, where happiness-relevant functioning achievement is high and subjective well-being is low.
Instead of a maximization paradigm, such an approach would probably also focus on comparative analyses of different policies (Frey and Stutzer 2012).
It is here that the paternalism objection seems to go wrong, as the lack of freedom associated with a “happiness police” telling people how to live their lives is likely to turn out to be well-being decreasing (as Anand et al. 2011, have established that enjoying substantive freedoms is associated with subjective well-being). See also more extensively Duncan (2010), pp. 169–171.
References
Adler, M. D. (2007). Well-being, inequality and time: The time-slice problem and its policy implications. Mimeo.
Algom, D., & Lubel, S. (1994). Psychophysics in the field: Perception and memory for labor pain. Perception and Psychophysics, 55(2), 133–141.
Anand, P., & Clark, A. E. (2006). Symposium introduction: Life satisfaction and welfare economics. Journal of Socio-Economics, 35, 177–179.
Anand, P., & Van Hees, M. (2006). Capabilities and achievements: An empirical study. Journal of Socio-Economics, 35, 268–284.
Anand, P., Hunter, G., Carter, I., Dowding, K., Guala, F., & Van Hees, M. (2009). The development of capability indicators. Journal of Human Development and Capabilities, 10(1), 125–152.
Anand, P., Hunter, G., & Smith, R. (2005). Capabilities and well-being: Evidence based on the Sen-Nussbaum approach to welfare. Social Indicators Research, 74, 9–55.
Anand, P., Krishnakumar, J., & Tran, N. B. (2011). Measuring welfare: Latent variable models for happiness and capabilities in the presence of unobservable heterogeneity. Journal of Public Economics, 95(3–4), 205–215.
Anand, P., Santos, C., & Smith, R. (2008). The measurement of capabilities. In K. Basu, & R. Kanbur (Eds.), Arguments for a better world: Essays in honor of Amartya Sen (Vol. 1, chapter 16, pp. 283–310). Oxford: Oxford University Press.
Angner, E. (2010). Subjective well-being. The Journal of Socio-Economics, 39(3), 361–368.
Binder, M. (2010). Elements of an evolutionary theory of welfare. London: Routledge.
Binder, M. (2013). Innovativeness and subjective well-being. Social Indicators Research, 111(2), 561–578.
Binder, M., & Broekel, T. (2011). Applying a robust non-parametric efficiency analysis to measure conversion efficiency in Great Britain. Journal of Human Development and Capabilities, 12(2), 257–281.
Binder, M., & Broekel, T. (2012). Happiness no matter the cost? An examination on how efficiently individuals reach their happiness levels. Journal of Happiness Studies, 13(4), 621–645.
Binder, M., & Coad, A. (2011a). Disentangling the circularity in Sen’s capability approach—An analysis of the co-evolution of functioning achievement and resources. Social Indicators Research, 103(3), 327–355.
Binder, M., & Coad, A. (2011b). From Average Joe’s happiness to Miserable Jane and Cheerful John: Using quantile regressions to analyze the full subjective well-being distribution. Journal of Economic Behavior & Organization, 79(3), 275–290.
Binder, M., & Coad, A. (2013). Capability, functioning and resources. In A. C. Michalos (Ed.), Encyclopedia of quality of life research. New York: Springer.
Binder, M., & Witt, U. (2011). As innovations drive economic growth, do they also raise well-being? Papers on Economics & Evolution, #1105, 1–19.
Binder, M., & Witt, U. (2012). A critical note on the role of the capability approach for sustainability economics. Journal of Socio-Economics, 41(5), 721–725.
Blanchflower, D. G., & Oswald, A. J. (2004). Well-being over time in Britain and the USA. Journal of Public Economics, 88, 1359–1386.
Bleys, B. (2012). Beyond GDP: Classifying alternative measures for progress. Social Indicators Research, 109(3), 355–376.
Brandolini, A., & D’Alessio, G. (2009). Measuring well-being in the functioning space. In E. Chiappero-Martinetti (Ed.), Debating Global Society—Reach and limits of the capability approach (pp. 91–156). Milan: Fondazione Giangiacomo Feltrinelli.
Bruelde, B. (2007). Happiness theories of the good life. Journal of Happiness Studies, 8, 15–49.
Cabanac, M. (1979). Sensory pleasure. The Quarterly Review of Biology, 54(1), 1–29.
Cabanac, M. (1992). Pleasure: The common currency. Journal of Theoretical Biology, 155, 173–200.
Camerer, C., Loewenstein, G. F., & Prelec, D. (2005). Neuroeconomics: How neuroscience can inform economics. Journal of Economic Literature, 43, 9–64.
Canoy, M., Lerais, F., & Schokkaert, E. (2010). Applying the capability approach to policy-making: The impact assessment of the eu-proposal on organ donation. The Journal of Socio-Economics, 39(3), 391–399.
Chiappero-Martinetti, E., & Salardi, P. (2007). Well-being process and conversion factors: An estimation of the micro-side of the well-being process. Mimeo.
Comim, F. (2005). Capabilities and happiness: Potential synergies. Review of Social Economy, 63(2), 161–176.
Damasio, A. R. (2003). Looking for Spinoza. London: Heinemann.
Deutsch, J., Ramos, X., & Silber, J. (2003). Poverty and inequality of standard of living and quality of life in Great Britain. In M. J. Sirgy, D. Rahtz, & A. C. Samli, (Eds.), Advances in quality-of-life theory and research (chapter 7, pp. 99–128). Dordrecht: Kluwer Academic Publishers.
Diener, E., & Seligman, M. E. P. (2004). Beyond money—Toward an economy of well-being. Psychological Science in the Public Interest, 5(1), 1–31.
Diener, E., Suh, E., Lucas, R. E., & Smith, H. L. (1999). Subjective well-being: Three decades of progress. Psychological Bulletin, 125(2), 276–302.
Dolan, P., Layard, R., & Metcalfe, R. (2011). Measuring subjective well-being for public policy. Office for National Statistics, February 2011.
Dolan, P., & Peasgood, T. (2008). Measuring well-being for public policy: Preferences or experiences? Journal of Legal Studies, 37(2), S5–S31.
Dolan, P., Peasgood, T., & White, M. (2008). Do we really know what makes us happy? A review of the economic literature on the factors associated with subjective well-being. Journal of Economic Psychology, 29, 94–122.
Duncan, G. (2010). Should happiness-maximization be the goal of government? Journal of Happiness Studies, 11(2), 163–178.
Fleurbaey, M. (2009). Beyond GDP: The quest for a measure of social welfare. Journal of Economic Literature, 47(4), 1029–1075.
Frey, B., & Stutzer, A. (2010). Happiness and public choice. Public Choice, 144(3), 557–573.
Frey, B., & Stutzer, A. (2012). The use of happiness research for public policy. Social Choice and Welfare, 38(4), 659–674.
Frey, B. S., & Stutzer, A. (2002). Happiness and economics. Princeton/New Jersey: Princeton University Press.
Gasper, D. (2010). Understanding the diversity of conceptions of well-being and quality of life. The Journal of Socio-Economics, 39(3), 351–360.
Graham, C. (2009). Happiness around the world. Oxford/New York: Oxford University Press.
Graham, C. (2011). The pursuit of happiness. Washington, D.C: The Brookings Institution Press.
Graham, C., & Chattopadhyay, S. (2009). Well-being and public attitudes in Afghanistan: Some insights from the economics of happiness. Brookings Working Paper No. 2.
Graham, C., & Felton, A. (2005). Variance in obesity across cohorts and countries: A norms-based explanation using happiness surveys. Mimeo.
Headey, B. (2010). The set point theory of well-being has serious flaws: On the eve of a scientific revolution? Social Indicators Research, 97, 7–21.
Helliwell, J. F., & Wang, S. (2012). The state of world happiness. In J. Helliwell, R. Layard, & J. Sachs (Eds.), World happiness report (chapter 2). New York: The Earth Institute.
Hirschberg, J. G., Maasoumi, E., & Slottje, D. J. (2001). Clusters of attributes and well-being in the USA. Journal of Applied Econometrics, 16(3), 445–460.
Hirschberg, J. G., Maasoumi, E., & Slottje, D. J. (2001). The environment and the quality of life in the United States over time. Environmental Modelling & Software, 16(6), 525–532.
Krueger, A. B., & Schkade, D. (2008). The reliability of subjective well-being measures. Journal of Public Economics, 92, 1833–1845.
Kuklys, W. (2005). Amartya Sen’s capability approach—Theoretical insights and empirical applications. Berlin: Springer.
Lancaster, K. J. (1966). A new approach to consumer theory. Journal of Political Economy, 74(2), 132–157.
Layard, R. (2005). Happiness—Lessons from a new science. London: Allen Lane.
Layard, R. (2010). Measuring subjective well-being. Science, 327(5965), 534–535.
Layard, R., Clark, A. E., Senik, C. (2012). The causes of happiness and misery. In J. Helliwell, R. Layard, & J. Sachs (Eds.), World happiness report (chapter 3, pp. 58–90). New York: The Earth Institute.
Lykken, D., & Tellegen, A. (1996). Happiness is a stochastic phenomenon. Psychological Science, 7(3), 186–189.
McClure, S. M., York, M. K., & Montague, P. R. (2004). The neural substrates of reward processing in humans: The modern role of fMRI. The Neuroscientist, 10(3), 260–268.
Michalos, A. C. (2011). What did Stiglitz, Sen and Fitoussi get right and what did they get wrong? Social Indicators Research, 102, 117–129.
Millenson, J. (1967). Principles of Behavioral Analysis. New York: MacMillan.
Nussbaum, M. C. (2003). Capabilities as fundamental entitlements: Sen and social justice. Feminist Economics, 9(2–3), 33–59.
Qizilbash, M. (2002). Development, common foes and shared values. Review of Political Economy, 14(4), 463–480.
Qizilbash, M. (2012). Utilitarianism, ‘adaptation’ and paternalism. In D. A. Clark, (Ed.), Adaptation, poverty and development: The dynamics of subjective well-being (chapter 2, pp. 35–60). Basingstoke: Palgrave Macmillan.
Redelmeier, D. A., & Kahneman, D. (1996). Patients’ memories of painful medical treatments: Real-time and retrospective evaluations of two minimally invasive procedures. Pain, 66, 3–8.
Robeyns, I. (2005). The capability approach: A theoretical survey. Journal of Human Development, 6(1), 93–114.
Sandvik, E., Diener, E., & Seidlitz, L. (1993). Subjective well-being: The convergence and stability of self-report and non-self-report measures. Journal of Personality, 61(3), 317–342.
Schokkaert, E. (2007). Capabilities and satisfaction with life. Journal of Human Development, 8(3), 415–430.
Schubert, C. (2012). Pursuing happiness: Can ‘happiness politics’ promote civil virtues? Kyklos, 65(2), 245–261.
Schubert, C., & Binder, M. (2013). Reconciling normative and behavioral economics: Applying the ‘naturalistic approach’ to the adaptation problem. Journal of Economics and Statistics (in press).
Schwarz, N., & Strack, F. (1999). Reports of subjective well-being: Judgmental processes and their methodological implications. In D. Kahneman, E. Diener, & N. Schwarz (Eds.), Well-being: The foundations of hedonic psychology (chapter 4, pp. 61–84). New York: Russell Sage Foundation.
Sen, A. K. (1984). Resources, values and development. Cambridge/Mass: Harvard University Press.
Sen, A. K. (1985a). Commodities and capabilities. Amsterdam: North-Holland.
Sen, A. K. (1985b). Well-being, agency and freedom: The Dewey lectures 1984. The Journal of Philosophy, 82(4), 169–221.
Sen, A. K. (1987). On ethics & economics. Oxford: Basil Blackwell.
Sen, A. K. (1992). Inequality reexamined. Oxford: Clarendon Press.
Sen, A. K. (1993). Capability and well-being. In M. C. Nussbaum, & A. K. Sen (Eds.), The Quality of Life (pp. 30–53). Oxford: Clarendon Press.
Slesnick, D. T. (1998). Empirical approaches to the measurement of welfare. Journal of Economic Literature, 36(4), 2108–2165.
Stiglitz, J. E. (2010). The Stiglitz report. New York/London: The New Press.
Sugden, R. (1993). Welfare, resources, and capabilities: A review of inequality reexamined by Amartya Sen. Journal of Economic Literature, 31(4), 1947–1962.
Sumner, L. W. (1996). Welfare, happiness, and ethics. Oxford: Oxford University Press.
Sumner, L. W. (2006). Utility and capability. Utilitas, 18(1), 1–19.
van Hoorn, A., Mabsout, R., & Sent, E.-M. (2010). Happiness and capability: Introduction to the symposium. The Journal of Socio-Economics, 39(3), 339–343.
van Praag, B. M. S. (1991). Ordinal and cardinal utility: An integration of the two dimensions of the welfare concept. Journal of Econometrics, 50(12), 69–89.
Veenhoven, R. (2010). Greater happiness for a greater number. Journal of Happiness Studies, 11, 605–629.
Wilson, T. D., & Gilbert, D. T. (2005). Affective forecasting—Knowing what to want. Current Directions in Psychological Science, 14(3), 131–134.
Witt, U. (2001). Learning to consume—A theory of wants and the growth of demand. Journal of Evolutionary Economics, 11, 23–36.
Acknowledgments
This research was funded by the ESRC-TSB-BIS-NESTA as part of the ES/J008427/1 grant on Skills, Knowledge, Innovation, Policy and Practice (SKIPPY). The author wishes to express his thanks to an anonymous referee for helpful suggestions. The usual caveat applies.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Binder, M. Subjective Well-Being Capabilities: Bridging the Gap Between the Capability Approach and Subjective Well-Being Research. J Happiness Stud 15, 1197–1217 (2014). https://doi.org/10.1007/s10902-013-9471-6
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10902-013-9471-6