How Economists Measure Wellbeing

How life satisfaction surveys, the Cantril ladder, and daily experience methods turn something as personal as happiness into data economists can study.

Happiness feels too personal to measure, yet economists and psychologists now collect wellbeing data from millions of people in more than 100 countries. The main tool is the life satisfaction survey: a short set of questions asking people to rate how their lives are going, usually on a number scale. The results are imperfect, but they turn out to be surprisingly consistent and useful.

Asking people directly

The simplest question is some version of: “Overall, how satisfied are you with your life nowadays?” People answer on a scale, often from 0 meaning not at all satisfied to 10 meaning completely satisfied.

A widely used version is the Cantril ladder, named after the researcher Hadley Cantril. People are asked to imagine a ladder with steps numbered from 0 at the bottom to 10 at the top. The top represents the best possible life for them, and the bottom the worst possible life. They are then asked which step they feel they stand on right now. Because the ladder is described in words, it works just as well when read aloud as when seen on paper.

Some national statistics offices ask a small set of related questions. Since 2011, the United Kingdom’s Office for National Statistics has asked about life satisfaction, whether the things people do feel worthwhile, how happy they felt yesterday, and how anxious they felt yesterday. Together these capture both overall judgments and recent feelings.

Measuring how days actually feel

Life satisfaction questions ask people to step back and judge. Other methods try to capture experience as it happens. In experience sampling, people receive a signal, such as a phone alert, at random moments during the day and report what they are doing and how they feel right then. A related approach, the Day Reconstruction Method developed by Daniel Kahneman and colleagues, asks people to walk back through the previous day episode by episode and rate their feelings during each one. These methods reveal which everyday activities people enjoy most and least, which is how researchers learned, for example, that commuting ranks among the least pleasant parts of many people’s days.

Reading a country's ladder score

The World Happiness Report, published every year since 2012, uses Cantril ladder answers from the Gallup World Poll, which surveys roughly 1,000 people per country each year. Scores are averaged over three years. If a country averages around 7 out of 10, that means a typical person places their life a little above the middle of the ladder toward the best life they can imagine. Nordic countries, especially Finland, have regularly scored near the top in recent years.

Can we trust the answers?

There are reasonable worries. Answers can shift with mood, the weather, or the question asked just before. People in different cultures may use scales differently; some may be more modest about saying they are very happy. And a number from 0 to 10 cannot capture everything that matters about a life.

Even so, the data pass several important checks. People who report higher life satisfaction are also rated as happier by friends and family, smile more, and tend to have better health outcomes. Answers move in sensible ways after major life events such as losing a job or getting married. And with large samples, random mood swings tend to cancel out. For these reasons, many economists treat wellbeing surveys as a valuable complement to traditional data like income and employment.

Treating small score differences as meaningful rankings

News stories often announce that one country is "happier" than another because it ranks a few places higher. When average scores differ by only a tenth of a point or so, the difference is usually within the margin of error. It is more accurate to talk about broad groups - countries near the top, middle or bottom - than about precise positions.

Key takeaways

Life satisfaction surveys ask people to rate their lives, usually on a 0 to 10 scale.
The Cantril ladder asks people where they stand between the worst and best possible life.
Experience sampling and day reconstruction capture how moments and activities feel.
Survey answers are imperfect but pass many checks of reliability.
Small differences in national rankings should not be over-interpreted.