Measures of subjective wellbeing are increasingly receiving attention from national statistical agencies, economists, and social scientists when evaluating the impacts of programmatic and policy investments. This is, in part, driven by the idea that improving general wellbeing should be a key policy objective. Designing policies with this goal requires robust measures of wellbeing and methods for determining how it can be improved cost-effectively. In this paper, we present a framework for assessing the relative influence of different material hardships and personal health problems on subjective wellbeing using the rich array of income, material hardship, and health measures collected by the Columbia University/Robin Hood Poverty Tracker, a longitudinal study of poverty and disadvantage in New York City. Launched in 2012, the Poverty Tracker interviewed a representative sample of more than 2,000 New York City residents quarterly through early 2015. In that time, the Poverty Tracker monitored income poverty, material hardship, general health, and subjective wellbeing using Cantril’s ladder, a validated measure of life satisfaction. We use the Poverty Tracker’s measures of life satisfaction, income, hardship, and health to “monetize” the influence of health and hardship on wellbeing – that is, we identify the monetary value of increments in wellbeing using the Poverty Tracker’s life satisfaction and income measures, and then compare the impacts of various material hardships and health problems on wellbeing using that metric. We look at self-reported health status, disability status, and the five types of hardship: (1) food; (2) bills; (3) financial; (4) housing; and (5) medical. For food, bills, financial, and housing hardships, we distinguish between moderate and severe hardships
The results indicate which factors most influence subjective wellbeing – for example, whether financial hardships are more or less consequential than health problems or housing hardships. We find that an individual’s wellbeing is affected by hardship and health problems, but not all hardships and health problems are equal. Poor health stands out as having a particularly large influence on wellbeing, diminishing life satisfaction by the equivalent of an enormous (nearly $317,000) change in income. Worrying about bills, in contrast, has a much lesser effect, reducing wellbeing in a similar way to that occasioned by a reduction of about $18,000 in income. But our results also indicate that severe hardships are indeed severe – regardless of whether they involve food, housing, or financial issues – reducing wellbeing by the equivalent of more than $100,000 in income. Our approach and results will prove useful for policymakers and program operators who would like to know how to best expend scarce resources to improve wellbeing.
