Life satisfaction
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Methods and principles for measuring life satisfaction

The purpose of the Open Social Value Bank is to help measure the changes we create in society that increase well-being, expressed as changes in a person's life satisfaction.

The measurement of life satisfaction based on subjective wellbeing methods builds on the work of Nobel Laureate Kahneman and Diener's development of the satisfaction with life scale (LS).

Research shows that there is a strong correlation between LS and e.g. employment, productivity, physical and mental health, social relationships, loneliness, stress and longevity.

Wellbeing expressed as changes in life satisfaction:

There are different ways to measure wellbeing, including 'evaluative wellbeing', i.e. self-assessed wellbeing. One of the measures of evaluative wellbeing is life satisfaction, which is used by the OECD1.

Life satisfaction is measured with a single question:

"Overall, how satisfied are you with your life at the moment?". Scale: 0 (not at all satisfied) - 10 (fully satisfied)

The WELLBY method (Wellbeing-Years):

The focus of this method is the value and cost of 1 "WELLBY" = 1 point of life satisfaction for one person for one year (on a 0-10 scale).

OSVB builds on the UK Treasury's Green Book2 and Frijters and Krekel (Oxford University, 2021)3 and uses the Subjective Wellbeing Valuation method to put a dollar value on wellbeing.

Strong correlation between social change and wellbeing expressed through life satisfaction

Life satisfaction: One of the most commonly used measures of evaluative wellbeing

The life satisfaction question successfully measures many important aspects of life. It is broadly predictive of many things that we would intuitively think would be associated with well-being, such as marital stability (Carr et al., 2014; Margelisch et al., 2017), longevity (Koivumaa-Honkanen et al., 2000; Chida and Steptoe, 2008; Diener and Chan, 2011; Steptoe and Wardle, 2011), and labor productivity (De Neve and Oswald, 2012; Oswald et al., 2015).

It is positively associated with a number of desirable states, such as close relationships (Jakobsson et al., 2004; Kesebir and Diener, 2009; Gustavson et al., 2016), social relationships (Powdthavee, 2008), physical and mental health (Layard et al., 2013; Layard, 2018), employment (Clark and Oswald, 1994; Blanchflower and Oswald, 2004) and social status (Alpizar et al., 2005; Anderson et al., 2012).

The life satisfaction question is easy to collect, easy to answer, and easy to interpret. It is probably the most widely used wellbeing measure in the world, and has been collected for millions of respondents in almost every country in the world, starting more than fifty years ago. The question has been used in major international data collections such as the World Happiness Report, Gallup World Poll, Global Flourishing Study, OECD, European Social Survey (ESS), European Values Survey (EVS), Survey of Health, Ageing, and Retirement in Europe, and many surveys in Denmark.

1OECD (2020), How's Life? 2020: Measuring Well-being, OECD Publishing, Paris

2M_Treasury (2021). "Wellbeing guidance for appraisal: supplementary green book guidance.

‍3Frijters, P. and C. Krekel (2021). A handbook for wellbeing policy-making: History, theory, measurement, implementation, and examples, Oxford University Press.

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