- _(iii)_ A 10-step life satisfaction measure _: All things considered, how satisfied or dissatisfied are you with your life these days? Please answer on a scale from 1 to 10, where 1 means completely dissatisfied, and 10 means completely satisfied;_

- (iv) A 10-step relative income ladder: _Please imagine a ten-step ladder where on the bottom, the first step, stand the poorest 10% of people in our country, and on the highest step, the tenth, stand the richest 10%. On which step of the ten is your household today?_

- _a. Now, imagine a ten-step ladder 4 years ago. On which step was your household at that time?_

- _b. And where on the ladder do you believe your household will be 4 years from now?_

- These subjective well-being measures are all so-called “evaluative” measures. They are concerned with global assessments of (satisfaction with) life as a whole<sup>11</sup> .

Note that satisfaction with life is measured with two different Likert<sup>12</sup> scales in the LiTS. We explore the relationship between these two measures in section 4.

# **3. Subjective measures of welfare in the LiTS: Consistency with “objective” welfare**

In this section, we examine the consistency of two subjective well-being measures (satisfaction with life and subjective relative income) with objective measures of welfare (consumption and assets). Discrepancies between these measures are to be expected, if only because subjective measures of well-being may capture multiple dimensions of welfare in ways that income and consumption cannot.

# **3.1. Subjective relative income**

The economic ladder question can be interpreted as a subjective measure of relative income. Respondents were asked to place their household on an economic ladder on which the poorest 10 percent of people in their country stood at the lowest step (step 1) and the richest 10 percent of the people were at step 10. Unlike the question about satisfaction with finances, the economic ladder question only asks the respondent to place the welfare of the household in their country’s

> 11 Accounts of subjective well-being measures are broadly categorized into _evaluative_ measures and _affective_ measures. In contrast with evaluative measures, affective measures such as those collected via the Experience Sampling Method or the Day Reconstruction Method, are generally concerned with _experienced utility,_ or the amount of affect experienced at any given moment (Kahneman and Krueger, 2006).

> 12 Likert measures are generally based on a symmetric scale that can measure disagreement (possible responses are strongly disagree, disagree, neither agree nor disagree, agree, and strongly agree) or satisfaction (e.g. very dissatisfied, dissatisfied, neither satisfied nor dissatisfied, satisfied, and very satisfied). Another type of evaluative measure is the Cantril ladder, based on a self-anchoring scale derived from the following description: “Please imagine a ladder with steps numbered from zero at the bottom to 10 at the top. The top of the ladder represents the best possible life for you and the bottom of the ladder represents the worst possible life for you. On which step of the ladder would you say you personally feel you stand at this time?” It is used, for instance, in the Gallup Poll (see Deaton 2011).

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