Subjective Well-Being and Public Policy

27 Pages Posted: 13 Nov 2017

See all articles by Reto Odermatt

Reto Odermatt

University of Basel

Alois Stutzer

University of Basel; IZA Institute of Labor Economics


Measures of subjective well-being have gained substantial attention in economics as quantitative approximations of individual welfare. They allow researchers to study relevant determinants of welfare on an individual as well as on a societal level. These determinants might not to be easily detectable in observable behavior. By referring to the recent well-being literature, we provide a selection of determinants of well-being that are important for public policy and show how the analysis of subjective well-being is applied as a complementary analytical tool for policy evaluation. We highlight the use of these measures for guiding public policy in areas that might involve suboptimal behavior. We also discuss some challenges for future research that are associated with the choice of evaluation metrics, the role of aspiration and adaption in evaluations, and utility misprediction.

Keywords: subjective well-being, determinants of welfare, policy evaluation, bounded rationality

JEL Classification: D61, D91, H4, I31

Suggested Citation

Odermatt, Reto and Stutzer, Alois, Subjective Well-Being and Public Policy. IZA Discussion Paper No. 11102, Available at SSRN: or

Reto Odermatt (Contact Author)

University of Basel

Alois Stutzer

University of Basel ( email )

Faculty of Business and Economics
Peter Merian-Weg 6
4002 Basel
0041 61 207 3361 (Phone)


IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072

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