The role of subjective well-being in measuring the progress of nations and guiding public policy

Nations assess human progress mainly through objective economic indicators of material progress (e.g., gross domestic product, consumption, etc.). However, these measures have important limitations. Moreover, the excessive focus on material aspects is leading the world to ecological, social and economic crises that are putting the future of humankind at risk. Building on previous work, this paper has three goals. First, to show how subjective measures of (psychological) well-being can complement the standard economic indicators of material progress. Second, to discuss the recent evidence which states that subjective well-being can help to build a better world. Third, to show policy examples concerning how subjective measures can help in allocating scarce resources, complementing the traditional economic methodologies.