Are Perceptions Reality? A Look at Subjective Well-Being in East Timor

Subjective well-being has been of growing interest over the past several years for multiple reasons. One reason is that this model gives an idea of the importance of the determinants (education, employment, etc.) of individual life satisfaction. But the question arises, does the relative importance of each explanatory variable in the subjective well-being model match the relative importance of individual’s perceptions of the most important factors to increase overall life satisfaction? For example, if the model suggests that employment status is the most important factor for improving subjective well-being do people perceive this to be true as well? This study attempts to answer this question using data from the 2001 Timor-Leste Living Standards Measurement Survey (TLSS). The survey asked respondents what is most important for improving life satisfaction with eleven variables to choose from. This is the measure of perceptions of life satisfaction and it is ranked in order of importance. The subjective well-being models are estimated using OLS and ordered logit models. Explanatory variables are categorized similarly to the perceptions measure. These coefficients are standardized and ranked according to importance. This is the empirical measure. Kendall’s Coefficient of Concordance is calculated to statistically show the degree of association between the perceptive measures and empirical measures. Main results show that there is a statistically significant difference between the relative importance of the empirical measures of subjective well-being and perceptions of subjective well-being