Economic Perspectives on Individual Well-being

The concept of individual well-being is central in Economics. This Chapter opens with a presentation of the various measures of “subjective” well-being used by economists. It is followed by a discussion describing the extent to which empirical measures of subjective well-being produce a better understanding of the determinants of the theoretical concept of “utility”. Most of the remainder of the Chapter reviews the empirical findings based on subjective well-being data in the field of Economics. The relationship between income and well-being is discussed at length through the Easterlin Paradox and the concept of relative utility. Findings from both seminal work and recent articles about the influence of a variety of individual socio-economic variables such as unemployment, health and marital status are reviewed. The last Section of the Chapter presents “objective” individual measure of well-being.