Enhancing Poverty Abatement Programs: A Subjective Well-Being Approach

39 Pages·2007·0.19 MB·English

Enhancing Poverty Abatement Programs:
A Subjective Well-Being Approach

Mariano Rojas
Department of Economics
Universidad de las Americas, Puebla, Mexico

Abstract:
This paper follows a subjective well-being approach to distinguish among
experienced poverty, experienced economic poverty, and income poverty. The
subjective well-being approach deals with persons of flesh and blood and who are in
their circumstance. The paper uses a life satisfaction conception of well-being to define
experienced poverty. Based on a domains-of-life approach, the paper shows that
experienced poverty (low life satisfaction) is a broader and richer concept than
experienced economic poverty (low economic satisfaction) and than income poverty
(low income level). It is shown that different conceptions of poverty lead to substantial
dissonance in the classification of persons as poor: not all income-poor persons are in
experienced poverty, while some non income-poor persons are in experienced poverty.
The paper deals with some reasons for these dissonances; it argues that experienced
poverty captures the multidimensionality and complexity of being human in a way that
income poverty can not do. The investigation questions the assumption used in
designing social policies which maintains that raising the income received by persons
automatically translates into greater well-being. It shows that public policies oriented
towards the abatement of income -and experienced economic- poverty could have a
greater well-being impact if they recognize the complexity of human beings and if they
take into consideration how satisfaction in other domains of life is affected. Hence,
public policy should not only be concerned about getting people out of income poverty,
but also about placing them in a life-satisfying situation.

1. Introduction
This paper uses a subjective well-being approach and it distinguishes between
experienced poverty, experienced economic poverty, and income poverty. According to
the approach, a human being is in experienced poverty if she has low life satisfaction;
while she is in experienced economic poverty if she has low economic satisfaction. The
income poverty definition follows a traditional income criterion: a person is in income
poverty if she is beneath a pre-determined income line. The subjective well-being
literature (van Praag and Ferrer-i-Carbonell, 2004; Easterlin, 2001; Diener et.al., 1993)
has found that income is a relevant explanatory variable for economic satisfaction;
though its explanatory capacity is not substantially high. In addition, the relationship
between life satisfaction and income is statistically significant; however, the estimated
coefficient is relatively tiny and the explanatory capability of income is astonishingly
small; hence, income is not a relevant explanatory variable for life satisfaction. The
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paper builds on these findings to propose that income poverty is not a good proxy for
experienced poverty.
Thus, the investigation focuses on the link between experienced poverty,
experienced economic poverty, and income poverty. It shows that these poverty
conceptions are conceptually different and that they lead to different classifications of
people as poor. It is argued that experienced poverty, which is defined in terms of a
person’s evaluation of her life satisfaction, is a broader and richer well-being concept;
while experienced economic poverty restrains itself to the study of satisfaction in just
one domain where human beings are being human. In addition, income has a limited
capacity to capture the richness of both economic and life satisfaction; thus, income
poverty is not expected to be strongly associated to experienced poverty. Hence, while
some concordance between income poverty and experienced poverty is expected, it is
also possible to find dissonance, this is: persons who are classified as poor on the basis
of their income, but who could not be considered as being in experienced poverty -on
the basis of their self-assessed life satisfaction-. The dissonance also emerges for people
who have low life satisfaction but who enjoy income levels that place them beyond the
income poverty classification.
The paper shows that the reasons for these dissonances must be found in the
multiplicity of factors associated to what it means to be a human being, as well as in the
limitations of the income-based poverty definitions to capture this multiplicity. A
domains-of-life approach is used to explain how experienced poverty emerges from a
multidimensional perspective of what it means to be a human being. Life satisfaction
refers to a person’s assessment of her life as a whole; this global assessments of life
plays important evaluation and decision purposes (Haybron, 2003), it also provides
useful information about how she is experiencing life (Veenhoven, 1991 and 1993; Eid
and Diener, 2004; Kim-Prieto et al., 2005) Furthermore, this one-dimensional
assessment of life as a whole can be explained –in an intricate way- from a person’s
satisfaction in many concrete areas where she is being a human being (Rojas, 2006a and
2007a). Thus, the explanatory factors of experienced poverty have to be found in those
many dimensions of being, which clearly go beyond the economic one.
In summary, the paper shows the advantages of the subjective well-being
approach to capture the complexity of a person’s well-being; it also shows that income-
based poverty approaches can not fully capture this complexity. The domains-of-life
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literature is used to illustrate the reasons for income-based poverty measures being
limited.
The paper is structured as follows: Section 2 discusses the subjective well-being
approach. Section 3 presents the domains-of-life literature. Section 4 establishes the
conceptual difference between experienced, economic and income poverty from a
subjective well-being approach. Section 5 discusses the Mexican database, as well as
the construction of the relevant variables for the empirical analyses. Section 6 studies
the situation of experienced and income poverty in Mexico. Section 7 deals with the
existence of dissonances and concordances in the classification of people as poor when
different criteria are followed. Section 8 uses the domains-of-life approach to explain
the nature of these dissonances; it shows that experienced poverty deals with a richer
conception of well-being and of what being human means. In addition, section 8
elaborates on how it would be possible to increase the well-being impact of income-
poverty abatement programs. Section 9 presents some major conclusions from the
investigation.

2. The Subjective Well-Being Approach to Poverty
Poverty is associated to a situation where a person’s well-being is low.1 Hence,
the subjective well-being approach (SWB) is relevant to study poverty because it deals
with the proper way of knowing a person’s well-being, as well as of identifying and
understanding its sources. The approach is based on the following six epistemological
principles (Rojas, 2007a):
First, it recognizes that a person’s well-being is essentially subjective; well-
being refers to the experience of being well which the person is living. It is the person
herself the one who is experiencing her well-being. The approach states that there is
little relevance in well-being conceptions that refer to a well-being not experienced by
people. Well-being conceptions that are unrelated to people’s experience of well-being
convey to normative and doctrinal discussions based on rhetoric and power-centered
debates.

1 A good reference for common understandings of poverty can be found in the December, 2006
issue of Poverty in Focus, published by UNDP International Poverty Centre. Most contributors to the
What is Poverty issue understand poverty either as low well-being, ill-being, or lack of well-being. All but
one contributors work with imputed or presumed well-being; the other contributor advocates a well-being
assessment based on stated preferences and participatory approaches.
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Second, SWB states that each person is the authority to assess her well-being,
because being well or not is a subjective experience. Hence, the approach rejects well-
being assessments made by third parties such as experts and policy makers. It argues
that third parties are not in a better position than the person herself to judge what she is
experiencing. Hence, the approach rejects the long-standing philosophical tradition that
places the authority of judging a person’s well-being on the philosopher or a group of
thoughtful people. This philosophical tradition is implicit in most well-being approaches
and, in consequence, it has dominated the study of poverty.
The subjective well-being approach to poverty distances itself from normative
approaches based on presumption or imputation of well-being. It states that approaches
based on presumption need corroboration; while approaches based on imputation show
a complete disregard for whether people are living the experience of being well or not.
Furthermore, there are substantial biases in presumed and imputed assessments of well-
being; because they are based on the realities (training, values, ways of life, goals and
aspirations, social conditioning, and so on) of third-parties rather than on life as people
experience it. SWB states that the role of third-parties is not to assess a person’s well-
being but to understand her own assessment through the elaboration and corroboration
of theories.
Third, SWB deals with the well-being as declared by the person. Well-being is
usually declared as an answer to a life-satisfaction, happiness, or having-a-good-life
question. Hence, it is a person’s evaluation of her life on the basis of a conception of
well-being as life satisfaction, happiness, or having a good life. The approach is open to
using different well-being conceptions, as long as the assessment is made by the person
herself.
Fourth, by directly asking people, SWB deals with the well-being of a person of
flesh and blood and who is in her circumstance. Thus, SWB differs from approaches
that study the well-being of abstract and unrealistic agents (e.g.: academically-
constructed agents and out-of-context individuals) A person of flesh and blood is being
human not only in one academically-defined arena (e.g.: the economic domain) but in
all aspects where she acts as a human being, such as her family relations, her pastimes
and use of leisure time, her purchasing power and its use, her job and responsibilities,
and so on. A person’s circumstance refers to the realities of her life – her culture,
upbringing and nurturing, her goals and values, her childhood experiences, her
aspirations, the family she was born in, her place of living, the traditions of her social
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group, and so on-. Every person evaluates her life in her circumstance; there is no
person without circumstance, and it does not make sense to think about a person getting
out of her circumstance to evaluate her life.2
Fifth, SWB takes a person’s assessment of her well-being as point of departure;
it then follows an inferential –bottom-up- methodology to identify the sources of a
person’s well-being. Hence, SWB substantially differs from those approaches that
presume without any corroboration what factors are relevant for explaining a person’s
well-being; it also differs from those approaches that impute a person’s well-being on
the basis of a list of ingredients or component parts (substantive conception of well-
being). Normative and presumed well-being approaches to poverty have oriented
poverty research to ever expanding lists of presumed relevant factors or ingredients, to
the construction of one-dimensional indices, to the study of the properties these indices
must satisfy, and to the exploration of how these one-dimensional indices change when
the arbitrarily defined factor weights are modified. There has been no intention, and
there is little room, to empirically corroborate the soundness of the presumed relevant
factors and of their presumed weights.
SWB also differs from participatory (stated-preferences) and revealed-
preferences techniques. These techniques just provide an ordering of relevant factors
which in order to be plausible require from people not only to be able of assessing their
well-being, but also to be able of accurately forecasting the impact on their well-being
of events which may have never been experienced.
SWB is flexible enough to deal and test heterogeneity across persons and across
cultures in their relevant well-being explanatory factors. Furthermore, SWB states that
universality in explanatory factors is something that must be proven rather than
assumed. In addition, the identification and relevance of valuable factors must not be
normatively established by thoughtful people, but directly derived through inferential
techniques from people’s own well-being assessments. Hence, explanatory factors are
of value as long as they contribute to a person’s well-being as she experiences it. The
identification of the sources of well-being requires inferential techniques and an

2 The subjective well-being approach does not exclude a normative discussion about someone’s
circumstances; but it states that this debate must be explicitly placed in the normative arena, where
tolerance and respect should prevail and where a person’s satisfaction with life should be taken as an
important criterion in the discussion. Any normative debate must face the fundamental questions of who
is the authority in judging another person’s circumstance and on what basis this authority has arisen. It is
clear that coercion and ethnocentricity have played a crucial role in the history of normative debates and
in the imposition of criteria to judge someone else’s circumstance.
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understanding of persons as they are: of flesh and blood, and who are being in their
circumstances. Rather than speculating about the sources of well-being, the expert must
follow a scientific process to identify them; this process involves exploration of the
data, advancement of theories and testing of hypotheses, re-formulation of theories on
the basis of previous findings, and so on.
Sixth, SWB calls for a transdisciplinary –or at least interdisciplinary- study of
well-being. The approach states that it is difficult to seize the complexity of a person’s
well-being assessment from any single discipline alone. The current analytical
compartmentalization of knowledge based on abstract academic agents does not provide
adequate theories to completely understand such an issue as human well-being. Those
approaches to well-being and poverty that highly rely on specific academic disciplines
provide well-being theories that do not fully capture what being human means, because
academically constructed agents and out-of-context individuals are incomplete to
understand the complexity of a human being. The risk of neglecting or overstressing
some human aspects is greater when these academically-biased approaches follow
imputed and presumed well-being assessments. Given the current compartmentalization
of knowledge, a better understanding of experienced well-being and its sources is
attained through interdisciplinary collaboration. The domains-of-life construct –to be
discussed in the next section- also provides a framework to attain a better understanding
of experienced well-being.

3. The Literature on Domains of Life
The domains-of-life literature states that life can be approached as a general
construct of many specific domains, and that life satisfaction can be understood as a
result from satisfaction in these domains of life (Cummins, 1996, 2003; Headey et al,
1984 and 1985; Headey and Wearing, 1992; Meadow et al, 1992; van Praag, Frijters,
and Ferrer-i-Carbonell, 2003; van Praag and Ferrer-i-Carbonell, 2004; Rampichini and
D’Andrea, 1998; Rojas, 2007a and 2006a; Salvatore and Muñoz Sastre, 2001; Saris and
Ferligoj, 1996; Veenhoven, 1996) Consequently, a relationship between life satisfaction
and satisfaction in domains of life is hypothesized.
The enumeration and demarcation of the domains of life is arbitrary; it can range
from a small number to an almost infinite recount of all imaginable human activities
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and spheres of being.3 Thus, there are many possible partitions of a human life, and the
selected partition depends on the researcher’s objectives. Nevertheless, Rojas (2006b)
argues that any partition must value parsimony -the number of domains must be
manageable and domains should refer to clearly separable information4-, meaning -the
domains of life, as delimited by the researcher, must relate to the way people think
about their lives-, and usefulness -the delimitation must contribute to the understanding
of the subject-.
Some researchers have studied satisfaction in all domains of life (Andrews and
Withey, 1976; Campbell et al, 1976; and Campbell, 1981) However, most researchers
have focused on the study of satisfaction in a few or just one domain of life (e.g.: job-
satisfaction) The relationship between subjective well-being and a person’s condition is
also the main research topic of many studies; for example, employment and happiness
(Clark and Oswald, 1994; Di Tella et al, 2001)
van Praag et al. (2003) study the relationship between satisfaction in different
domains of life (health, financial situation, job, housing, leisure, and environment) and
satisfaction with life as a whole. Rojas (2006a, 2006b, and 2007a) has also studied the
relationship between life satisfaction and satisfaction in domains of life. He has worked
with seven domains: health, economic, job, family, friendship, self, and community. He
shows that the relationship is complex.

4. Experienced Poverty, Experienced Economic Poverty and Income Poverty
SWB conceives poverty as a situation where a person’s experienced well-being
is low (Rojas, 2006b). Thus, by using a domains-of-life approach, it is possible to
distinguish between experienced poverty and experienced economic poverty. The
former refers to a situation where a person’s well-being –a life-satisfaction conception is
used in this paper- is low; the later refers to a situation where a person’s satisfaction in
her economic domain is low. Economic satisfaction relates to just one area of a person’s
life and, in consequence, experienced poverty is a broader and more complex
phenomenon than experienced economic poverty.

3 As it is stated by Cummins “The possible number of domains is large. If each term describing
some aspect of the human condition is regarded as separate, then their number is very large indeed.”
(Cummins, 1996, p. 304)
4 Cummins (1996) argues that many terms describing some aspects of the human condition share a
great deal of their variance.
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It has been shown that economic satisfaction contributes to life satisfaction;
however, it does not determine life satisfaction (Rojas, 2006a, 2006b, and 2007a; van
Praag et.al., 2003). Furthermore, economic variables such as income and expenditure
are important explanatory variables for economic satisfaction, but not so much for life
satisfaction and happiness (Rojas, 2005a and 2006b). Hence, income is not expected to
be strongly related to experienced poverty because a person’s assessment of her well-
being does take into consideration her satisfaction in all domains of life where she is
being human, and not only her satisfaction in the economic domain (Rojas, 2006a and
2007a) Research based on the domains-of-life approach shows that there is more in life
than the standard of living. In addition, there is heterogeneity in life purposes across
persons and cultures; hence factors that could be of great importance for some people
may be completely irrelevant for others (Rojas, 2005b and 2007b)
In consequence, based on research findings about the importance and
multidimensionality of areas in which persons are being human it is reasonable to
propose that the relationship between experienced poverty and income poverty is weak.

5. The Database
5.1 The survey
A survey was conducted in five states of central and south Mexico, as well as in
the Federal District (Mexico City) during October and November of 2001.5 A stratified-
random sample was balanced by household income, gender and urban-rural areas.
People interviewed fall within all national income deciles; however, because of the
stratified nature of the sample, there is some under-representation in the bottom national
income deciles –on the basis of household per capita income- and some over-
representation in the top national deciles.6 The sample of 1540 questionnaires had a
response rate of 96 percent in the household income question. The sample size is
acceptable for inference in central Mexico.
5.2 The variables
The survey gathered information regarding the following quantitative and
qualitative variables:

5 The author expresses his gratitude to CONACYT, Mexico for a grant that financially supported
this research.
6 For example, 7.2 percent of people in the sample fall in the first national income decile; 20
percent of people in the sample fall in the first three national income deciles; 37.4 percent of people in the
sample fall in the first five national income deciles; and 66 percent of people in the sample fall in the first
eight national income deciles.
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Demographic and Social Variables: education, age, gender, civil status,
household-income dependent persons.
Economic Variables: current household income.
Life Satisfaction: the following question was asked: “Taking everything in your
life into consideration, how satisfied are you with your life?” A seven-option categorical
answering scale was used. The scale’s answering options are: extremely unsatisfied,
very unsatisfied, unsatisfied, neither satisfied nor unsatisfied, satisfied, very satisfied,
extremely satisfied.7 Life Satisfaction was handled as an ordinal variable, with values
between 1 and 7; where 1 corresponds to the extremely unsatisfied category and 7 to the
extremely satisfied category.8
Economic Satisfaction: Four satisfaction questions related to the economic
domain of life were asked: How satisfied are you with your income? (income); How
satisfied are you with what you can purchase? (purchasing power); How satisfied are
you with your housing conditions? (housing condition); and How satisfied are you with
your household’s financial situation? (financial situation). Each satisfaction question
had a seven-option verbal answering scale similar to the one used for the life
satisfaction question. Satisfaction questions were handled as cardinal variables, with
values between 1 and 7; where 1 was assigned to the lowest satisfaction level and 7 to
the highest. A single economic satisfaction variable was built on the basis of factorial
analysis with principal components extraction applied to the four answers. The new
variable was re-scaled to a 0 to 100 scale.
Satisfaction in other Concrete Areas of Life: Twenty questions were asked to
inquire about satisfaction in many aspects of life beyond the economic domain,9 such

7 SWB states that well-being as experienced by the person herself is bounded; hence, satisfaction
with life and with domains of life is measured on the basis of bounded scales (van Praag, 1991) This
assumption is supported by neurological and evolutionary studies, as well as by philosophical arguments.
Neurological and evolutionary studies show that the nervous system of humans -as well as of other
animals- does have physical limitations that lead to saturation from stimulation (Kandel et al., 2000;
Gallistel et al., 1991; and Simmons and Gallistel, 1994) Evolutionary approaches emphasize the state role
of experienced well-being in evolution (Grinde, 1996, 2002; Barkow, 1997; Buss, 2000; Sapolsky, 1999)
Philosophy argues that happiness must be considered as a state to be reached (Tatarkiewickz, 1976;
Haybron, 2000, 2003)
8 The author has found that results do not substantially differ when life satisfaction is treated as a
cardinal rather than as an ordinal variable. Ferrer-i-Carbonell and Frijters (2004) also show that there are
no substantial differences when satisfaction is treated either as a cardinal or as an ordinal variable. They
state in their conclusions that: “We found that assuming cardinality or ordinality of the answers to general
satisfaction questions is relatively unimportant to results.”
9 The instrument is a shorter version of the Extended Satisfaction with Life Scale developed by
Diener et.al. (1985). Alfonso et.al. (1996) have shown that the instrument has strong reliability and
validity, that it leads to clearly identifiable domains of life which satisfy psychometric tests for reliability
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as: job conditions, job responsibilities, working shifts, health condition, health services,
interpersonal relations and sense of security in the neighbourhood, quality of public
services such as trash collection and public transport, family relations (partner, children,
rest of family), availability and use of leisure time, relations with friends, and so on. A
seven-option answering scale similar to the one used for the life satisfaction question
was used. Factor analysis was applied to reduce the number of dimensions and to
demarcate the domains of life. Six domains of life –beyond the economic one- were
distinguished on the basis of the factorial analysis.10 A regression method was used to
calculate each new factor score and to construct a satisfaction variable for each domain;
the new variables were re-scaled to a 0 to 100 scale. Thus, satisfaction variables are also
available for the following domains of life:
- health: satisfaction with current health and with the availability and quality of
medical services.
- job: satisfaction with job’s activity, with job’s responsibilities, with working
shifts, and with hierarchical working relationships.
- family: satisfaction with spouse or stable-partner relationship, with children
relationship, and with rest-of-family relationship.
- friendship: satisfaction with friends and with availability of time to spend with
them.
- self: satisfaction with recreational and leisure activities, with availability of time
to pursue hobbies and interests, with personal development, and with
education.
- community environment: satisfaction with community services such as trash
collection, public transport, road conditions, public lights, neighborhood
safety and trust in local authorities; as well as satisfaction with neighbors.
It is obvious that the demarcation of the domains of life is somewhat determined
by the original set of twenty-four questions. However, this classification is close to
Cummins’ (1996)

and convergent and discriminant validity. Cummins et.al. (1994) have also studied the psychometric
properties of domains-of-life satisfaction questions, as well as Gregg and Salisbury (2001).
10 Some people in the survey could not assess their satisfaction in some concrete areas of life.
These people were short of information in one or more aspects of life, not because they did not want to
provide an answer, but because they did not perform in those aspects of life. Rojas (2006c) studies the
situation of domain-absentee persons.

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