Developments in the Measurementof Subjective Well-BeingDaniel Kahneman and Alan B. KruegerFor good reasons, economists have had a long-standing preference forstudying peoples’ revealed preferences; that is, looking at individuals’ ac-tual choices and decisions rather than their stated intentions or subjectivereports of likes and dislikes. Yet people often make choices that bear a mixedrelationship to their own happiness. A large literature from behavioral economicsand psychology finds that people often make inconsistent choices, fail to learn fromexperience, exhibit reluctance to trade, base their own satisfaction on how theirsituation compares with the satisfaction of others and depart from the standardmodel of the rational economic agent in other ways. If people display boundedrationality when it comes to maximizing utility, then their choices do not neces-sarily reflect their “true” preferences, and an exclusive reliance on choices to inferwhat people desire loses some of its appeal.Direct reports of subjective well-being may have a useful role in the measure-ment of consumer preferences and social welfare, if they can be done in a credibleway. Indeed, economists have already made much use of subjective well-being data.From 2001 to 2005, more than 100 papers were written analyzing data on self-reported life satisfaction or happiness, according to a tabulation of EconLit, up fromjust four in 1991–1995. Data on subjective well-being have been used by economiststo examine both macro- and micro-oriented questions. In a classic paper, Easterlin(1974) examined the relationship between economic growth and happiness. Morerecently, Di Tella, MacCulloch and Oswald (2001) use data on life satisfaction fromthe Eurobarometer to infer how people trade off inflation for unemployment, andAlesina, Glaeser and Sacerdote (2005) use the same data to study whether laboryDaniel Kahneman is Eugene Higgins Professor of Psychology and Public Affairs, and AlanB. Krueger is Bendheim Professor of Economics and Public Affairs, both at PrincetonUniversity, Princeton, New Jersey.Journal of Economic Perspectives—Volume 20, Number 1—Winter 2006 —Pages 3–24market regulation makes people better off. Gruber and Mullainathan (2004)examine the effect of cigarette taxes on self-reported happiness to draw inferencesabout the rationality of smoking using data from the General Social Surveys for theUnited States and Canada. Questions about subjective well-being, like the extent towhich the respondent feels calm and peaceful, have also been included as outcomemeasures in the Moving to Opportunity for Fair Housing and Rand Health Insur-ance experiments (Kling, Liebman and Katz, 2005).Yet another use of subjective well-being has been to provide an external checkon economic indicators. For example, Nordhaus (1998) and Krueger and Siskind(1998) compare income growth deflated by the consumer price index to changesin the percentage of the population that reports an improvement in their financialposition to assess bias in the price deflator. In discovering the potential value ofsubjective well-being surveys, researchers are following in the footsteps of profit-seeking companies like Gallup, which regularly conduct morale and satisfactionsurveys of workers and customers for their corporate clients.What are economists to make of this enterprise? Can well-being be measuredby a subjective survey, even approximately?In this paper, we discuss research on how individuals’ responses to subjectivewell-being questions vary with their circumstances and other factors. We will arguethat it is fruitful to distinguish among different conceptions of utility rather thanpresume to measure a single, unifying concept that motivates all human choicesand registers all relevant feelings and experiences. While various measures ofwell-being are useful for some purposes, it is important to recognize that subjectivewell-being measures features of individuals’ perceptions of their experiences, nottheir utility as economists typically conceive of it. Those perceptions are a moreaccurate gauge of actual feelings if they are reported closer to the time of, and indirect reference to, the actual experience. We conclude by proposing the U-index,a misery index of sorts, which measures the proportion of time that people spendin an unpleasant state, and has the virtue of not requiring a cardinal conception ofindividuals’ feelings.Measuring Subjective Experience in Principle and in the LabThe earliest popular conceptions of utility, from Jeremy Bentham throughFrancis Ysidro Edgeworth and Alfred Marshall, was as a continuous hedonic flow ofpleasure or pain. Kahneman has called this conception experienced utility, and it isalso similar to what Juster, Courant and Dow (1985) call process benefits.1Edgeworth1Juster, Courant and Dow define process benefits as the “direct subjective consequences from engagingin some activities to the exclusion of others....Forinstance, how much an individual likes or dislikesthe activity ‘painting one’s house,’ in conjunction with the amount of time one spends in painting thehouse, is as important determinant of well-being independent of how satisfied one feels about having afreshly painted house.”4 Journal of Economic Perspectivesdefined the happiness of an individual during a period of time as the sum of themomentary utilities over that time period; that is, the temporal integral of momen-tary utility.Several methods have been used to attempt to measure the moment-to-moment flow of pleasure or pain in the laboratory. An advantage of laboratoryexperiments is that extraneous aspects of an experience can be controlled, and theunique effect of a stimulus on individuals’ experiences can be evaluated. Partici-pants in many experiments in psychology and in consumer research, for example,are required to undergo an experience, such as being exposed to loud noises orwatching a film clip. They are asked to provide a continuous indication of thehedonic quality of their experience in real time by manipulating a lever thatcontrols a marker on a scale, which is usually defined by extreme values such as verypleasant and very unpleasant and by a neutral value. In a similar fashion, publicopinion during a political debate is sometimes assessed by means of a “dial group,”in which a group of observers continually indicate their pleasure or displeasure withthe candidates’ views by continuously adjusting a dial.