THE RELATIONSHIP BETWEEN MEASURES OF SUBJECTIVE AND ECONOMIC WELL-BEING - A NEW LOOK

The objective of this research is to examine the importance of variable specification in using economic variable to explain the variance in individual's perceived (1) overall psychological, (2) economic, and (3) non-economic well-being. Results indicate that careful specification of economic variables improves the explained variance of perceived subjective well-being. Specification of dependent variable, life satisfaction, based on a domain-specific scale, proves superior to using the response to the global satisfaction question, "How do you feel about life as a whole?' Economic variables prove significant in explaining both perceived economic and non-economic domains of life satisfaction. Although its overall effect on life satisfaction is negative, increased family size is found to enhance non-economic life satisfaction, while detracting from economic aspects of life satisfaction.