Committee on National Statistics
Work in Economic Measurement Highlighted
T
his column appears periodically in Amstat News to update and his colleagues takes an alternate route based on time budgets
readers about activities of the Committee on National and effective ratings of experience. Part of the seminar was spent
Statistics (CNSTAT) of the National Academies. Here, we sharing results from the Day Reconstruction Method (DRM) and
highlight a recent CNSTAT seminar delivered by Alan Krueger, Princeton Affect and Time Survey (PATS), which Krueger has
Bendheim Professor of Economics and Public Affairs at Princeton combined with historical data on time use to highlight evidence
University, which reflected important themes in CNSTAT’s ongo- on the reliability of subjective well-being measures. The PATS is
ing work to improve economic measurement. a 24-hour time diary that collects information about emotions
associated with all activities engaged in during the day using BLS’s
Measuring Well-Being
American Time Use Survey (ATUS) instrument. Data from the
In a presentation titled “National Time Accounting: The diaries allow various emotional states (e.g., happy, stressed, sad) to
Currency of Life,” at the October 2007 CNSTAT seminar, be tracked by activity and aggregate measures of well-being to be
Krueger reported progress toward the development of methods compared across different groups—defined by income, age, gen-
for measuring subjective well-being of individuals and groups. der, education level, marital status, etc. The method also can be
The topic is part of Krueger’s broader research agenda, which useful for comparing time use and well-being of populations over
is collaborative with Daniel Kahneman of Princeton University, time and across countries.
David Schkade of UCSD, Norbert Schwarz of the University of
Michigan, and Arthur Stone of Stony Brook University. The pre-
National Well-Being Index
sentation focused on the relationship between the time people For time-accounting work, it has been useful to cluster similar
spend engaged in various activities and subjective measures of activities into categories such as unpleasant personal maintenance
satisfaction or well-being. (medical care, homework), moderately enjoyable tasks (walking
Krueger challenges the notion that observable variables (e.g., or using a computer), leisure activities, neutral and down time,
income) should be exclusively used as proxies for opportunities mundane chores, work and work-like activities. Emotions by
and well-being, while direct, reported measures of well-being cluster can then be measured and trends of time in each cluster
should be avoided. Likewise, the conventional wisdom has it that monitored. These measures form the conceptual basis for produc-
revealed preferences—actual choices rather than stated inten- ing a national account tracking time use across groups and activi-
tions—should be the mainstay in the study of economic behav- ties. Inferences about population satisfaction levels would change
ior. Krueger argues, however, that people’s choices have a complex along with time allocation patterns. An increase in such burden-
relationship with well-being, and decisions often appear at odds some or aggravating activities as commuting would decrease a
with those predicted by the standard model of economic rational- population’s well-being, while increases in such enjoyable activi-
ity—people make inconsistent choices, their levels of satisfaction ties as leisure would increase well-being. Quantifiable evidence
seem closely linked to how their situation compares with others, of this sort could be useful in informing a range of policies. For
rather than to some absolute level, and they fail to learn from example, such research has shown that people with higher base-
experience. As a result, more nuanced models are needed. line satisfaction scores have greater resistance to cold viruses and
heal more quickly from certain kinds of injuries, which has impli-
Well-Being and Economic Modeling
cations for health care.
Advances in psychology and neuroscience suggest experienced util- Going further, this line of research could even lead to the accep-
ity and well-being can (with some caveats) be measured accurately, tance of alternative measures of national well-being that are more
and such measures relate in a predictable manner to certain behav- complex than purely income-based ones, such as GDP. Krueger
iors, health outcomes, and other objective measures. Krueger also cited, as an example of a particularly ambitious goal, a national
noted, if reliable, self-reported, subjective measures of well-being well-being index. Something like this already has been imple-
could be generated, it would significantly alter the direction of mented in the Kingdom of Bhutan’s Gross National Happiness
economic science. In addition to playing a useful role in measure- measure, which attempts to provide direct reports of subjective
ment and prediction of consumer preferences, acceptance of such well-being and an understanding of other economic phenomena,
measures would enable more direct methods for analyzing soci- such as trends in social welfare. However, Krueger cautioned that,
ety’s welfare, changing the nature of the concept from one based given the current state of knowledge and data, a gross national
solely on consumption opportunities to one based on a broader happiness measure was, at this point, overly ambitions.
set of experienced activities. Similarly, analysis of well-being could
evolve from one based solely on income to one that includes other
Misery Index
factors, such as relative rank in society. Additionally, the influence More realistically, Krueger suggested the idea of developing a
of time allocation and changes in circumstance on people’s well- “U-index”—a misery index of sorts—that measures the propor-
being could be incorporated into economic modeling. tion of time people spend in an unpleasant state (e.g., frustrated,
Much of the well-being measurement literature uses questions worried, depressed, angry, hassled, criticized). The U-index, which
about overall life satisfaction or happiness; the work of Krueger underpins much of his group’s research, is versatile because it is
MARCH 2008 AMSTAT NEWS 21
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