Essays in the economics of subjective well-being

This thesis explores three major issues in the burgeoning empirical literature on the determinants of subjective well-being (SWB).While economic theory assumes that it is current consumption that matters to SWB, empirical work has focused almost exclusively on the effect of income. In Part 1, we use household panel data from Russia and Britain to show that neither the standard theoretical account, nor the standard empirical practice may be adequate. Consumption, income, and wealth each contribute separately to SWB, in particular via perceptions of status and anticipation of the future; and omitting consumption from SWB equations significantly understates the importance of money to SWB. Distinguishing between consumption and income is also important to identifying reference effects. In Part 2, we confirm earlier findings that others' income has a positive (informational) effect on SWB in Russia, but show that others' consumption has an offsetting negative (comparison) effect. The net effect depends on how we define individuals' reference groups. We develop a novel econometric model that lets us estimate these reference groups from the data. Contrary to previous results, we conclude that comparison dominates information.Most SWB analyses focus on the average effects of money, relationships, and other outcomes across a given population; yet there may be significant differences in what is important to different people. In Part 3, we employ parametric and semi-parametric random coefficient models to show that there are large differences in the determinants of individual SWB in Britain, and (in contrast to previous work) that such differences cannot simply be attributed to differences in individuals' reporting functions. While individual differences correlate with (some) observable demographic variables, they do not generally correlate with individuals' perceptions about what is important to them. The results of SWB research may therefore be a useful source of information.