Abstract
This paper compares theories of well-being/welfare in economics and psychology. It suggests that economists have an appropriate conceptual framework but the wrong variables for explaining well-being, whereas psychologists have a confusing framework but appropriate variables. A framework derived from “the new home economics” (Becker, 1965, 1973, 1977; Lancaster, 1966; Justeret al., 1985; Pollak and Wachter, 1975), and especially from the work of F. Thomas Juster and his colleagues, is proposed for the purpose of integrating economic and psychological variables into an account of human well-being. Essentially the framework calls for investigation of the impact of a household's economic and psychological stocks (capital account) on the psychic income flows (current account) and overall well-being of its members. It is suggested that this framework is valuable for clarifying individual and household decisions as well as for explaining variance in well-being.
Empirical assessment of existing frameworks and an illustration of how the proposed framework could be implemented are made with data drawn from a 5-wave Australian Quality of Life Panel Survey.
Similar content being viewed by others
References
Abbey, A. and Andrews, F. M.: 1985, ‘Modelling the psychological determinants of life quality’, Social Indicators Research 16, 1–16.
Alwin, D. F. and Hauser, A. M.: 1975, ‘The decomposition of effects in path analysis’, American Sociological Review 40, 37–47.
Andrews, F. M. and Withey, S. B.: 1976, Social Indicators of Well-Being, (Plenum, New York).
Argyle, M.: 1987, The Psychology of Happiness (Methuen, London).
Becker, G.: 1965, ‘A theory of the allocation of time’, Economic Journal 75, 493–517.
Becker, G.: 1973, ‘A Theory of Marriage: Part 1’, Journal of Political Economy 81, 813–846.
Bradburn, N. M.: 1969, The Structure of Psychological Well-Being (Aldine, Chicago).
Campbell, A., Converse, P. E., and Rodgers, W. R.: 1976, The Quality of American Life (Sage, New York).
Costa, P. T., McCrae, R. R., and Arenberg, D.: 1983, ‘Recent Longitudinal Research on Personality and Aging’, in K. W. Schaie (ed) Longitudinal Studies of Adult Psychological Development (Guilford, New York).
Diener, E.: 1984, ‘Subjective well-being’, Psychological Bulletin 45, 542–575.
Diener, E., Emmons, R. A., Larsen, R. J., and Griffin, S.: 1985, ‘The satisfaction with life scale: a measure of life satisfaction’, Journal of Personality Assessment 49, 71–75.
Diener, E., Larsen, R. J., Levine, S., and Emmons, R. A.: 1985, ‘Intensity and frequency: dimensions underlying positive and negative affect’, Journal of Personality and Social Psychology 48, 1253–1265.
Eysenck, H. J. and Eysenck, S. B. G.: 1964, Manual of the Eysenck Personality Inventory (Stoughton, London).
Eysenck, H. J. and Eysenck, S. B. G.: 1969, Personality Structure and Measurement (Routledge & Kegan Paul, London).
Hanushek, E. A. and Jackson, J. E.: 1977, Statistical Methods for Social Scientists (Academic Press, New York).
Headey, B. W.: 1988, ‘The Life Satisfactions and Priorities of Australians’, in J. Kelley and C. Bean (eds) Australian Attitudes: Social and Political Analysis from the National Social Science Survey, (Allen & Unwin, Sydney).
Headey, B. W., Holmstrom, E. L., and Wearing, A. J.: 1982, Australians' Priorities, Satisfactions and Well-Being: Methodological Issues (Melbourne University, Melbourne).
Headey, B. W., Holmstrom, E. L., and Wearing, A. J.: 1984, ‘Well-being and ill-being: different dimensions?”, Social Indicators Research 14, 115–139.
Headey, B. W., Holmstrom, E. L., and Wearing, A. J.: 1985, ‘Models of well-being and ill-being’, Social Indicators Research 17, 211–234.
Headey, B. W. and Wearing, A. J.: 1987, ‘Chains of well-being, chains of ill-being’, International Conference on Subjective Well-Being, Werner-Reimers-Stiftung Foundation, Federal Republic of Germany, July 8–11.
Henderson, S., Byrne, D. G., and Duncan-Jones, P.: 1981, Neurosis and the Social Environment (Academic, New York).
Holmes, R. H. and Rahe, R. H.: 1967, ‘The social readjustment rating scale’, Journal of Psychosomatic Research 11, 213–218.
Holmstrom, E. L.: 1985, ‘Women's time, men's time: what we say and what we do’, ANZAAS Festival of Science, Monash University, August 26–30.
Janis, I. L. and Mann, L.: 1979, Decision Making (Free Press, New York).
Juster, F. T. and Courant, P. N.: 1986, ‘Integrating Stocks and Flows in Quality of Life Research’ in F. M. Andrews (ed) Research on the Quality of Life (I.S.R., Ann Arbor).
Juster, F. T., Courant, P. N., and Dow, G. K.: 1985, ‘A Conceptual Framework for the Analysis of Time Allocation Data’, in F. T. Juster and F. P. Stafford (eds) Time, Goods and Well-Being (I.S.R., Ann Arbor).
Juster, F. T. and Land, K. C.: 1981, Social Accounting Systems (Academic, New York).
Kim, J. O.: 1975, ‘Multivariate analysis of ordinal variables’, American Journal of Sociology 81, 261–298.
Lancaster, K. J.: 1966, ‘A new approach to consumer theory’, Journal of Political Economy 74, 132–157.
Larsen, R. J., Diener, E., and Emmons, R. A.: 1985, ‘An evaluation of subjective well-being measures’, Social Indicators Research 17, 1–18.
Moos, R. H., Cronkite, R. C., Billings, A. G., and Finney, J. W.: 1984, Health and Daily Living Form (Stanford University, Stanford).
Pollak, R. A. and Wachter, M. L.: 1975, ‘The relevance of household production function and its implications for the allocation of time’, Journal of Political Economy 83, 255–277.
Robinson, J. P.: 1977, How Americans Use Time (Praeger, New York).
Ruggles, R.: 1981, ‘The Conceptual and Empirical Strengths and Limitations of Demographic and Time Based Accounts’, in F. T. Juster and K. C. Land (eds) Social Accounting Systems (Academic, New York).
Sarason, I. G., Levine, H. M., Basham, R. B., and Sarason, B. R.: (1983), ‘Assessing social support: the social support questionnaire’, Journal of Personality and Social Psychology 44, 127–139.
Scitovsky, T.: 1976, The Joyless Economy (Oxford University, Oxford).
Sen, A.: 1987, The Standard of Living (Cambridge University, Cambridge).
Szalai, A.: 1972, The Use of Time (Mouton, The Hague).
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Headey, B. An economic model of subjective well-being: Integrating economic and psychological theories. Soc Indic Res 28, 97–116 (1993). https://doi.org/10.1007/BF01079653
Accepted:
Issue Date:
DOI: https://doi.org/10.1007/BF01079653