Tessa Peasgood Centre for Well-being in Public Policy Sheffield University

1. Modelling Subjective Well-being. Do strong social relations lead to increases in well-being? Tessa PeasgoodCentre for Well-being in Public PolicySheffield University

2. SWB in the British Household Panel Survey • “Please tick the number which you feel best describes how dissatisfied or satisfied you are with the following aspects of your current situation….......……. your life?” 1 2 3 4 5 6 7 Not satisfiedCompletely satisfied • 12-item General Health Questionnaire (GHQ) - used to detect the presence of non-psychotic psychiatric morbidity in community settings

3. THE GHQ • a) been able to concentrate on whatever you're doing ? • c) felt that you were playing a useful part in things ? • d) felt capable of making decisions about things ? • g) been able to enjoy your normal day-to-day activities ? • h) been able to face up to problems ? • l) been feeling reasonably happy, all things considered ? • More so than usual (1), Same as usual (2), Less so than usual (3), Much less than usual (4) • b) lost much sleep over worry ? • e) felt constantly under strain ? • f) felt you couldn't overcome your difficulties ? • been feeling unhappy or depressed ? • been losing confidence in yourself ? • k) been thinking of yourself as a worthless person ? • Not at all (1), No more than usual (2), Rather more than usual (3), Much more than usual (4)

5. Why use both life satisfaction and GHQ? • May measure different aspects of SWB • Different time period (4 weeks vs.1 year+) • Life satisfaction more evaluative • GHQ externally determined affects, may not be what is important to the individual Different measures have different problems, if results are similar, or we understand why they vary, should give confidence in results.

6. How valid are these SWB measures? Interpretation problems • Not clear what time period are people using for life satisfaction • Not clear if people are including non self-referencing concerns e.g. others well-being • GHQ compares to ‘usual’ but may be using scale absolutely • a third of respondents who answer better than, or less than usual to the general happiness question in wave 12 also do so in wave 13 Measurement error • Situational factors & question ordering – what attention is drawn to at the time • Life satisfaction influenced by mood - BUT life satisfaction more stable than mood • Culturally appropriate responses • problematic if adjusting responses is linked to circumstances e.g. unemployment

7. Are life satisfaction responses internally consistent?

8. Why the inconsistency? • Poor memory for what life was like a year ago • Measurement error (current year, previous year or both) • Not a clear concept • Revaluate past based on new information • Need to assume people use the scales in the same way & that current evaluation of current time is privileged

9. Some confidence derived from: • SWB correlates with informant reports, smiling and interviewer ratings • SWB predicts suicide • Other subjective measures have predictive powers • Job satisfaction predicts quitting job • Subjective health predicts suicide and longevity • Life satisfaction & GHQ will tell use something about SWB but will have considerable measurement error.

10. Social capital and well-being • Has been found to be linked to beneficial outcomes e.g. lower crime rates, child welfare, public health, market performance, education performance (Helliwell & Putnam 2004) • Some evidence of direct link social capital to individual well-being/happiness (Putman 2000, Helliwell 2004, Diener and Seligman 2002), using range of measures for social capital • Focus here on social and personal relationships • Intimate relationship & marriage status • How often meet friends and family • How often talk to neighbours • Average level of social relationship scale for the district

11. The Model SWBit = β’Xit + αi + uit SWB (Life satisfaction or GHQ score) for individual i at wave t Matrix of explanatory variables e.g. income & health of individual i at wave t Individual effect Shifts SWB up/down but doesn’t change how much Xs effect Y (β same for everyone) If happy disposition would shift Y upward in all time periods Error term All change in SWBit not captured by Xit and αi

12. SWBit = β’Xit + αi + uit To estimate β need to either remove or estimate αi Fixed effects Using deviations from individual means individual effect (αi) drops out (αi is the same as the individual mean αi) Comparing individual to themselves at different time periods Can’t say much about variables which don’t vary ‘within’ the individual over the time period Can use OLS fixed effects on life satisfaction and GHQ but assumes cardinality

13. Ordered logit Treat life satisfaction as latent, continuous variable LS* LSit = 1 if -∞ <= LS* <= μ1 = 2 if μ1 < LS* < μ2 = 3 if μ2 < LS* < μ3 etc. • Probability of an outcome (e.g. Life sat = 5) calculated as linear function of explanatory variables plus set of thresholds or cut points. • Control for unobserved individual effects by including individual level means of all explanatory variables (Mundlak approach) • Since model uses logit assumption on error term the log odds of being in higher life satisfaction category are linearly dependent on the explanatory variables.

19. Results • Broadly the same using for life satisfaction, GHQ, ‘not at all’ unhappy, and modelling as ordered variable or cardinal, and for males and females • Social relationships important • Financial coping and health biggest knock to well-being • Financial coping related but not identical to income • 50% of top income, and 15% of bottom quintile ‘living comfortably’ • 14% of those in the top income quintile think they are just about getting by or are finding it difficult or very difficult financially. • Need to look at ‘real’ household income, accounting for the costs of living, where those ‘costs of living’ may be influenced by geographical costs differences, or individually held (and socially driven) expectations of ‘necessary’ expenditures.

20. Direction of causality? Income SWB Health SWB Social relationships SWB • May be other factors influencing SWB and X’s e.g. life events like having sick child • Could address endogeneity using Instrument Variables but hard to think of truly exogenous variables • Likely that route from SWB to X’s slower. Some evidence that cheerfulness in college students predicted higher income 19 years later (Diener et al 2002)

21. Still confident people matter.. A lot One very clear message from this range of different modelling techniques on different SWB measures is that the people around you really matter. Those times when we have people who we see regularly and who create a friendly and peaceful local environment are the times when we are more satisfied with our lives and less likely to experience unhappiness. But is this a policy concern?

22. Some indication of positive externalities, social connectedness not entirely private good - role for intervention • Indirect impact on social relationships of other policies (e.g. flexible labour force, hours worked) should be considered • Increasing income may reduce social connectedness.

23. Fixed effects OLS on social relations scale • When other variables are controlled for, the negative relationship between income and social relationships scale remains. • Being in the bottom two income quintiles is significantly related to having a higher social relationships scale, although perceived inability to cope financially is associated with reduced social relationships

24. Conclusion • Can’t say income isn’t important to SWB, financially difficulties very important • Increased income may contribute to other sources of SWB e.g. health • BUT • Policies which focus on increasing income risk undermining other sources of SWB • Policies shouldn’t confuse means to well-being as ends