Robert Metcalfe

Measuring Subjective Wellbeing: Recommendations on Measures for use by National Governments

Governments around the world are now beginning to seriously consider the use of measures of subjective wellbeing (SWB) – ratings of thoughts and feelings about life – for monitoring progress and for informing and appraising public policy. The mental state account of wellbeing upon which SWB measures are based can provide useful additional information about who is doing well and badly in life when compared to that provided by the objective list and preference satisfaction accounts. It may be particularly useful when deciding how best to allocate scarce resources, where it is desirable to express the benefits of intervention in a single metric that can be compared to the costs of intervention. There are three main concepts of SWB in the literature – evaluation (life satisfaction), experience (momentary mood) and eudemonia (purpose) – and policy-makers should seek to measure all three, at least for the purposes of monitoring progress. There are some major challenges to the use of SWB measures. Two related and well-rehearsed issues are the effects of expectations and adaptation on ratings. The degree to which we should allow wellbeing to vary according to expectations and adaptation are vexing moral problems but information on SWB can highlight what difference allowing for these considerations would have in practice (e.g. in informing prioiritisation decisions), which can then be fed into the normative debate. There are also questions about precisely what attention should be drawn to in SWB questions and how to capture the ratings of those least inclined to take part in surveys, but these can be addressed through more widespread use of SWB. We also provide some concrete recommendations about precisely what questions should be asked in large-scale surveys, and these recommendations have been taken up by the Office of National Statistics in the UK and are being looked at closely by the OECD.

Destruction and Distress: Using a Quasi-Experiment to Show the Effects of the September 11 Attacks on Mental Well-Being in the United Kingdom*

Using a longitudinal household panel dataset in the UK, where a significant proportion of the interviews are conducted in September each year, we are able to show that the attacks of September 11 resulted in lower levels of subjective well-being for those interviewed after that date in 2001 compared with those interviewed before it. This quasi-experiment provides one of the first examples of the impact of a terrorist attack in one country on well-being in another country.

Neighbors, knowledge, and nuggets: two natural field experiments on the role of incentives on energy conservation

There is increasing research on the exogenous impact of descriptive social norms on economic behavior. The research to date has a number of limitations: 1) it has not de-coupled the impact of the norm and the knowledge required to understand how to change behavior based upon it; 2) it has exclusively used offline but not online (i.e. emails) methods; and 3) it has not understood the impact of financial incentives in conjunction with norms. We address these three limitations using two natural field experiments. We find, firstly, that norms change energy behavior over a 15 month treatment period irrespective of whether information is provided or not. We find that social norms reduce consumption by around 6% (0.2 standard deviations). Norms have has their largest impact on the day that information on the social norm is received, and then decreases over time. Secondly, we do not find that social norms work online (even with experienced consumers who are used to online billing) - social norms de- livered online may have very little beneficial effects on reducing energy use. Thirdly, we find that large financial rewards work very well online in reducing consumption, with a 0.35 change in energy consumption over a four month period. Perhaps most interestingly, we find that the large effect of financial incentives is completely removed when information on social norms is added online.

Valuing health directly

Decisions about which conditions and treatments to prioritise are never easy. Paul Dolan and colleagues argue that they should be based on people’s experiences rather than on what people think they might feel

Valuing Health: A Brief Report on Subjective Well-Being versus Preferences

Health care can improve people’s quality of life, and it can help them live longer. The qualityadjusted-life-years (QALYs) approach has been developed to express these twin components of benefit (quality and quantity of life) in a single number. It expresses different health states on a scale between 0 for death and 1 for full health and then multiplies these values by how long the states last. One QALY is equivalent to 1 year of life in full health. By comparing how many QALYs different interventions are expected to generate with how much those interventions are expected to cost, it is possible to show the cost-effectiveness of different uses of resources. In the United Kingdom, the National Institute for Health and Clinical Excellence (NICE) recommends that ‘‘the value of changes in patients’ health related quality of life should be based on public preferences using a choice-based method . . . [and] the EQ-5D is the preferred measure of HRQL in adults.’’ The EQ-5D defines health in terms of 1 of 3 levels of severity (broadly, no problems, some problems, and extreme problems) associated with each of 5 dimensions (mobility, self-care, usual activities, pain/discomfort, anxiety/depression). Each of the 243 (3) health states are represented by a 5-digit code, ranging from 11111 for full health to 33333 for extreme problems on all 5 dimensions. Values for these states have been elicited by asking members of the public for their time tradeoff (TTO) preferences, that is, to state how many years of life in 11111 they consider to be equivalent to a longer period of time in one of the remaining 242 ‘‘poor’’ health states. There is a long tradition of asking for people’s preferences over future, hypothetical prospects. 5,6 It is also not without its problems, most notably the fact that circumstances often affect individuals quite differently from how they imagine them. If, say, we overestimate the impact on our lives of mobility relative to anxiety/depression, then all else equal, agencies such as NICE will end up allocating relatively more priority to health states that affect mobility—and relatively less to anxiety/ depression—than would be the case if priorities were set according to the actual impact those states had on our lives. One way of assessing how health states affect us is to consider their association with subjective well-being (SWB). In general, SWB can be measured by global evaluations of life overall (e.g., life satisfaction) or by experiences of daily affect (e.g., feelings about yesterday). There is increasing interest in the use of SWB for policy purposes, as highlighted by the recent influential Sarkozy commissionand the widespread assessment of SWB in the United Kingdom. There have, however, been few attempts to relate SWB and health status, although Graham and others did show the association between the EQ5D and Cantrill’s ‘‘ladder of life,’’ which asks respondents to rate their life with best and worst possible life as endpoints. These data suggest that mobility does indeed have less impact than anxiety/depression. There are no studies showing how the EQ5D affects life satisfaction, which is a much more widely used evaluative measure of SWB, and there are no studies showing how the EQ5D affects more direct measures of experience, such as ‘‘day affect’’ (mood during the day). Critically, there have also been no previous attempts to show how health state values based on the general public’s willingness to give up life-years compare to values estimated Received 10 August 2011 from London School of Economics, London, UK (PD), and University of Oxford, Merton College, Oxford, UK (RM). Revision accepted for publication 6 December 2011.

Valuing lives and life years: anomalies, implications, and an alternative

Many government interventions seek to reduce the risk of death. The value of preventing a fatality (VPF) is the monetary amount associated with each statistical death that an intervention can be expected to prevent. The VPF has been estimated using a preference-based approach, either by observing market behaviour (revealed preferences) or by asking hypothetical questions that seek to replicate the market (stated preferences). The VPF has been shown to differ across and within these methods. In theory, the VPF should vary according to factors such as baseline and background risk, but, in practice, the estimates vary more by theoretically irrelevant factors, such as the starting point in stated preference studies. This variation makes it difficult to choose one unique VPF. The theoretically irrelevant factors also affect the estimates of the monetary value of a statistical life year and the value of a quality-adjusted life year. In light of such problems, it may be fruitful to focus more research efforts on generating the VPF using an approach based on the subjective well-being associated with different states of the world.

Influencing Financial Behavior: From Changing Minds to Changing Contexts

This article reviews interventions that are effective in changing behaviours in ways that enhance financial capability. Traditionally, behavior change has been seen through the lens of “changing minds”: if we can change the way people think—their beliefs, attitudes, and goals—then we can change the way they behave. More recent developments in behavioral theory show that “changing contexts” can have a powerful effect on behavior: we can change behavior by sometimes quite subtle changes to the environment or context within which decisions are made. We focus largely on the influence of context and provide examples from current UK banks that have changed the “choice architecture” of their products.

Subjective Well-Being: Weather Matters; Climate Doesn't

We investigate the impact of short-term weather and long-term climate on self-reported life satisfaction using panel data. We find robust evidence that day-to-day weather variation impacts life satisfaction by a similar magnitude to acquiring a mild disability. Utilizing two sources of variation in the cognitive complexity of satisfaction questions, we present evidence that weather bias arises because of the cognitive challenge of reporting life satisfaction. Consistent with past studies, we detect a relationship between long-term climate and life satisfaction without individual fixed effects. This relationship is not robust to individual fixed effects, suggesting climate does not directly influence life satisfaction.

Social redistribution of pain and money.

People show empathic responses to others’ pain, yet how they choose to apportion pain between themselves and others is not well understood. To address this question, we observed choices to reapportion social allocations of painful stimuli and, for comparison, also elicited equivalent choices with money. On average people sought to equalize allocations of both pain and money, in a manner which indicated that inequality carried an increasing marginal cost. Preferences for pain were more altruistic than for money, with several participants assigning more than half the pain to themselves. Our data indicate that, given concern for others, the fundamental principle of diminishing marginal utility motivates spreading costs across individuals. A model incorporating this assumption outperformed existing models of social utility in explaining the data. By implementing selected allocations for real, we also found that while inequality per se did not influence pain perception, altruistic behavior had an intrinsic analgesic effect for the recipient.