Measuring well‐being for public policy: preferences or experiences?

Policy makers seeking to enhance well-being are faced with a choice of possible measures that may offer contrasting views about how well an individual's life is going. We suggest that choice of well-being measure should be based on three general criteria: (1) the measure must be conceptually appropriate (that is, are we measuring the right sort of concept for public policy?), (2) it must be valid (that is, is it a good measure of that concept?), and (3) it must be empirically useful (that is, does it provide information in a format that can be readily used by policy makers?). Preference-based measures (as represented by income) are compared to experience-based measures (as represented by subjective evaluations of life) according to these criteria. Neither set of measures meets ideal standards, but experiences do fare at least as well as preferences, and subjective evaluations perform much better than income alone as a measure of well-being.