Internal and External Determinants of Subjective Well-Being: Review and Policy Implications

Starting in the 1970s, political scientists have challenged the common practice to rely exclusively on economic indicators (e.g., GDP) to measure progress and development (Andrews and Withey 1976; Campbell, Converse & Rodgers 1976; Cantril 1965; Michalos 1985). One problem of the reliance on purely economic indicators is that increased economic progress does not guarantee greater well-being. For example, at the moment many people in developed countries are concerned that outsourcing and globalization decrease their subjective well-being even though it may increase their countries’ GDP. Social indicators that assess people’s subjective well-being addresses this limitation of economic indicators. In recent years, public policy makers have recognized the importance of subjective indicators of well-being for public policy decisions (Bönke 2005). As noted by Bonke (2005), public policy intervention implicitly or explicitly “not only aims at increasing material living conditions, but also at improving individual well-being in a general sense.” (p. 5).