Agency, human dignity and subjective well-being

Abstract

Over the last two decades there has been an important shift in the way economists understand welfare and development. The discipline has gone from assessing wellbeing in terms of an unideminsional measure like income, to multidimensional measures that take into account non-economic variables such as what individuals do and can do, how they feel, and the natural environment they live in (Alkire, 2002; Stiglitz et al., 2009; Alkire and Foster, 2011; Alkire and Santos, 2014). In the vein of Amartya Sen's in uential work, development is seen as the process of expanding freedoms that people value and have reason to value (Sen, 1999). Two important aspects of this freedom linked to the basis of social rights are agency and human dignity (Gauri, 2004). Agency freedom refers to what the person is free to do and achieve in pursuit of whatever goals or values he or she regards as important (Sen, 1985). On the other hand, dignity is related with social inclusion, taking part in the life of the community (Sen, 1999).1 This paper explores the importance of agency, and dignity in explaining subjective well- being. We are speci cally interested in measures of life satisfaction and job satisfaction. Our work uses a unique dataset of Chilean households, the \Other Dimensions of Household Quality of Life" survey, especially designed by the Oxford Poverty and Human Development Initiative (OPHI) to gather internationally comparable indicators on employment quality, empowerment, physical safety, human dignity and psychological and subjective wellbeing, sometimes referred as the missing dimensions of poverty (Alkire, 2007). Our hypothesis is that agency is positively correlated with individual's subjective wellbe- ing, because it re ects the capacity the individual has to do what he values. The measure we use for agency is related with the individual's perception of freedom to decide for himself how to lead his life. A natural interpretation of the hypothesis is thus that the more freedom an individual has to decide how to lead her life, more wellbeing she experiences. On the other hand, our hypothesis is that individuals less likely to regularly experience shame in public are associated with higher subjective wellbeing. In particular, we focus on two aspects of dignity: shame proneness and discrimination. Therefore, individuals that experience more shame or feel discriminated should experience less wellbeing. Our rst set of results provides correlational evidence on the importance of agency, shame and discrimination in life satisfaction. The results suggest that agency, shame and discrimi- nation are correlated with life satisfaction. Next, we explore if agency and discrimination at work are correlated with job satisfaction. The results show that both agency and discrimi- nation at work explain job satisfaction. An important potencial source of bias in our estimates is the absence of personality traits. It has been shown that genetics factor are strongly correlated with happiness (Lykken and Tellegen, 1996; Inglehart and Klingemann, 2000). Moreover, personality traits as repressive- defensiveness, trust, emotional stability, locus of control-chance, desire for control, hardiness, positive a ectivity, private collective self-esteem, and tension have been linked to subjective wellbeing (DeNeve and Cooper, 1998; Diener et al., 2003). In order to attenuate the potencial bias for omitting personality traits, we follow Van Praag and Ferrer-i Carbonell (2008) and we construct a measure of personality traits that we in- clude in our regressions.The results show an important positive bias in the estimates of the relationship between subjective wellbeing, agency, shame and discrimination. In particular, after controlling by personality traits the OLS parameters associated with agency and shame decrease their magnitude in nearly 50% in the life satisfaction estimates. Also, the parameter associated with discrimination decreases in magnitude and becomes statistically insigni cant. On the other hand, the bias is less important in the estimates of job satisfaction, agency and discrimination. Overall, our results show that the di erence in life satisfaction between individuals who feel they have freedom to decide for themselves how to lead their life in comparison with the individuals that don't, has the same magnitude as the di erence in life satisfaction between people from the rst and fth quintile of income. Also, being in the fth quintile of the shame proneness index in comparison with the rst quintile has the same e ect on life satisfaction as the di erence in life satisfaction between the people from the second and fth quintile of income. Finally, perceived discrimination is not associated with life satisfaction. On the other hand, individuals with more agency at work are more satis ed with their job. In particular, individuals that do their job only because they need the money are less satis ed with their job in comparison with the individuals that do their job because they find almost twice the e ect related with working part-time. This study contributes to the recent but vast literature on subjective wellbeing and the literature on multidimensional wellbeing in development, more speci cally to recent studies emphasizing the importance of measuring dimensions of wellbeing that seem central to human development traditionally ignored in empirical work. Our results related with the relationship between agency and subjective wellbeing are consistent with international evidence (Veen- hoven, 2000; Welzel et al., 2003; Inglehart et al., 2008; Verme, 2009; Welzel and Inglehart, 2010; Fischer and Boer, 2011; Victor et al., 2013). The same can be said with respect to the results related with the relationship between perceived discrimination and subjective well- being (Werkuyten and Nekuee, 1999; Pascoe and Smart Richman, 2009). To our knowledge the association between subjective wellbeing and shame proneness has not been explored before. More closely related to our paper, Inglehart et al. (2008) and Welzel and Inglehart (2010) provide cross country evidence of the link between subjective wellbeing and freedom. In particular, Welzel and Inglehart (2010) presents a human development model that links agency to subjective wellbeing. Using data form the World Values Survey, they show that people that have more opportunities in life put more emphasis on emancipative values, and, in turn, their gains in agency have a greater impact in their subjective wellbeing. On the other hand, Verme (2009) tries to address the role of personality traits in the relationship of agency and subjective wellbeing. He argue that the locus of control plays an important role in how humans value freedom of choice. Using a combination of all rounds of the World and European Value Surveys, he nds that the variables that measures freedom of choice and the locus of control predicts life satisfaction better than any other factors included in the study. In particular, people who believe that the outcome of their actions depends on internal factors appreciate more having freedom than people who believe that the results of their actions are determined by external factors. This work, highlights the importance of taking into account personality traits when analyzing the relationship between agency and subjective wellbeing. Our paper contributes to the literature mainly in three ways. First, alongside with Verme (2009) we make a special e ort in order to control by personality traits which allow us avoid bias in the estimates of the relationship between subjective wellbeing, agency, shame and discrimination. Second, we explore the relationship between subjective wellbeing and shame. Third, we analyze the relationship between job satisfaction, agency and discrimination. The rest of the paper is organized as follows: Section 2 describes the data and introduces our measures of agency and dignity. Section 3 presents the empirical strategy. Section 4 presents the estimation results. Section 5 concludes.