Changes in Subjective versus Objective Well-Being in India

Working paper number: 
2021-71
Paper Abstract: 
Although there is abundant literature on subjective well-being (SWB), there is virtually none for India. Growing recognition of the validity and accuracy of measures of SWB of well-being underlies the rapid growth of literature on SWB in recent decades but it has mainly focused on developed countries. Ours is, to our knowledge, the first study of SWB at the all-India level, and one of the few on developing countries, with a rigorous validation of the results. Applying robust OLS and ordered probit models to the India Human Development Survey (IHDS) panel data in 2005 and 2012, we assess SWB changes in 2005-2012, based on a self-reported measure of changes in economic well-being, as a function of household and state covariates in 2005. This is in sharp contrast with earlier studies’ focus on the levels of SWB. Another point of departure of our study and an innovative extension is to compare the covariates of SWB changes with those of objective well-being (OWB) changes, proxied by the relative growth in real per capita household consumption between 2005 and 2012. Households with an older and educated head in a larger household, located in urban areas or affluent states in 2005 tend to experience further improvement in both SWB and OWB between 2005 and 2012. On the contrary, households with a female household head, with more male members in the labour market, with regular access to mass media, without members suffering from non-communicable diseases or disability are more likely to be better off subjectively without experiencing corresponding improvement in OWB. The policy challenges raise serious concerns.