This discussion paper examines subjective well‐being using the National Income Dynamics Study. The
survey is an individual level panel survey, with data collected biannually, with 4 waves available, from
2008‐2015. The survey is particularly rich, and in addition to economic measures of well‐being, it includes
individual level data on subjective well‐being. Subjective well‐being is measured by asking respondents to
rate their level of life satisfaction, at the point of being interviewed, and to think about how their current
level of life satisfaction relates to their level of satisfaction historically.
Kahneman and Kreuger (2005) report that “while various measures of well‐being are useful for some
purposes, it is important to recognize that subjective well‐being measures features of individuals’
perceptions of their experiences, not their utility as economists typically conceive of it. Those perceptions
are a more accurate gauge of actual feelings if they are reported closer to the time of, and in direct
reference to, the actual experience.”
Therefore, studying subjective well‐being is worth pursuing, as actual feelings are a relevant gauge of an
individual’s life satisfaction. These perceptions may be distorted – but are arguably the best measure of
how an individual’s experience of the world at a given point in time is translated into well‐being.