Developments in the Measurement of Subjective Well-Being and Poverty: An Economic Perspective

Drawing on unique survey data for rural Pakistan, we estimate a happiness model to explore to what extent an economic perspective adds to our understanding of subjective wellbeing poverty. The data elicits information on subjective well-being in general and particularly on financial well-being in terms of household's happiness with the current income or expenditure. We find that the well-being approach closely depicts the idea of well-being poverty in terms of the level education, health and income which matter significantly. Moreover unlike developed nations this study suggests a positive impact of children on well-being and poverty due to their productive contribution. As studies employing good data from developing countries are rare, this paper can potentially make a good contribution to the existing happiness literature, with special reference to Pakistan. Secondly, it brings new and strong empirical evidence to alternative approaches to subjective well-being poverty.