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118 Economists like to study people on the basis of what they do (choices). However , human beings are much more complex and many aspects of their wellbeing are not necessarily reflected in observable choices, but are embedded in intangibles such as wishes, perceptions and expectations. As Amartya Sen (1986, p.18) puts it, “the popularity of this view [individual utility only depends on tangible goods, services and leisure and it is inferred from behaviour, or revealed preferences ] in economics may be due to a mixture of an obsessive concern with observability and a peculiar belief that choice is the only human aspect that can be observed.” The “Economics of Happiness” has been trying to challenge these narrow assumptions combining economists’ and psychologists’ techniques and complementing standard income-based measures of welfare with broader measures of well-being. The ultimate objective is to gain a better understanding of “Quality of Life” (QoL) in order to design successful policies for improving living conditions. Research on QoL, or perceived well-being in general, focuses on its interrelationships with income, inequality, macro and micro policies, political arrangements , and social capital. As noted by Graham (2008), one particularly appealing feature of happiness research is that “there are certain questions to which revealed preferences cannot provide answers, but happiness surveys (based on expressed preferences) can provide some insights. These include the welfare effect of macro and institutional arrangements that individuals are powerless to change (inequality Vulnerabilities and Subjective Well-Being mauricio cárdenas, carolina mejía, and vincenzo di maro 5 vulnerabilities and subjective well-being 119 is one example), and behavior that is driven by norms, addiction, or self-control problems.” This chapter aims to contribute to the study of the link between deprivation and well-being. Deprivation can relate to most aspects of human life, including psychological, physical and economical ones. The focus of this chapter is on the vulnerability of individuals and households to situations and occurrences that can potentially lead to deprivation and, ultimately, adversely affect well-being. In particular , the chapter narrows down the concept of vulnerability focusing on three types of insecurity: nutritional, personal, and job-related. This set of insecurities seems rich enough to encompass several potentially important aspects of one’s life and, therefore, is able to capture the broader concept of deprivation. In addition to this, these different types of insecurity can be studied in comparison to each other so as to highlight their relative importance in explaining perceived well-being. The idea that the relationship between deprivation and QoL is a particularly complex one is supported by several well established results in the happiness literature , some of them already mentioned in previous chapters, such as the well known Easterlin paradox. Although within countries wealthier people are, on average, happier than poor ones, the relationship between per capita income and average happiness level across countries is much weaker.1 In particular, wealthier countries (as a group) are found to be happier than poor ones (as a group), but happiness seems to rise with income only up to a point and not beyond it. There is now some controversy on the existence of this paradox. Anthony and Charles Kenny (2006) argue that welfare, represented by objective indicators such as life expectancy, infant mortality, literacy, and housing, has a weak relationship with income, either absolute or relative. Recent work by Angus Deaton (2007), which makes use of the 2006 Gallup World Poll, shows that across countries average happiness is strongly related to per capita national income. Moreover, this effect holds across the range of international incomes, ruling out the existence of a critical level of per capita income above which income has no further effect on happiness. Even the strong positive relationship between income and happiness within countries is now challenged by many additional findings. After basic needs are met, other factors such as rising aspirations, relative income differences, and the security of gains become increasingly important in explaining happiness. It has been argued that humans are on a “hedonic treadmill”: aspirations increase along with income and, after basic needs are met, relative rather than absolute levels matter to well-being.2 Interestingly, some studies on Latin America show how inequality can undermine the positive welfare effects of living in developing countries with higher average income.3 1. In regard to the affirmation that, whithin countries, wealthier people are, on average, happier than poor ones, see Easterlin (1974); see also Oswald (1997) and Diener and others (1993). 2. See...

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