Essays on the Measurement of Subjective Well-Being across Countries

The use of Subjective Well-Being (SWB) data in Economics is growing rapidly. Although traditionally marginalized due to their subjective nature, several studies provide convincing evidence that SWB data are reliable and valid sources of well-being information, and can provide supplementary information to that obtained from standard objective indicators of well-being. The overarching aims of this thesis are to gain a deeper understanding of how SWB data can best be used to measure national SWB, and to explore the properties of life satisfaction data. This thesis proposes a new measure of national SWB, designed for use with high-resolution SWB scales. The proposed measure is defined as the ‘share of satisfied individuals’ and is constructed using reported life satisfaction data from the World Values Survey and the European Values Survey. It is argued that this headcount measure is better suited for use with SWB data, which are bounded, ordinal, and arbitrary. ‘Satisfied’ individuals are identified using a data-driven approach based on an observed data-cliff in reported life satisfaction, and motivated by cognitive dissonance theory. The proposed theory suggests that the observed data-cliff indicates individuals’ reluctance to report below satisfaction level 5 (on a scale of 1-10). Regression analysis is used to explore the relationship between national life satisfaction and objective indicators of development. An important result is that the proportion of satisfied individuals is found to be strongly associated with social indicators of well-being (i.e. life expectancy and education measures) but not significantly associated with per capita Gross National Income. This thesis also attempts to identify the driving factors behind the observed data-cliff. Individual-level multivariate analysis reveals that individuals are reluctant to report below satisfaction level 5 in response to a reduction in income, dropping trust levels, and failing health; but changes in employment and marital status tend to overcome this reluctance.