Individual Differences in the Impact of Socio-Economic Events on Health and Well-Being

People's well-being, consisting of, for example, their health, happiness and overall satisfaction with life, is influenced by a wide variety of life events (e.g., income increases, marriage, and unemployment) as well as changes in the society in which they live (e.g., changes in national income and how equally that income is distributed). Our programme of research will show (a) the type of person who loses or gains the most well-being when these events take place, and (b) the psychological reasons as to why people's well-being changes after such events. Showing why, and for whom, socio-economic events can have a large impact on well-being is important for understanding basic questions such as why some people are happier or more depressed than others. Such research can also help in understanding the impact of policy (for example, who will suffer the most if society becomes more unequal). We use already collected datasets which provide tens of thousands of people's responses, over several years, to questionnaires about themselves and their levels of well-being. These well-being responses, as well as detailed medical information about their biological functioning, can be linked to specific events that people have encountered in their lives. We use these datasets to ask five key research questions, each with both theoretical and policy implications;

1. Do well-being reactions to socio-economic events (such as marriage or unemployment) depend on a person's personality prior to the event occurring? If so, this would suggest that certain people have predictably stronger or weaker reactions depending on their existing psychological characteristics, indicating who may need the most support following life events.

2. Whilst personality by definition represents quite stable psychological characteristics, here we ask whether personality changes in predictable and meaningful ways following life events. If personality is something that changes, then this suggests some potential for policy discussions and applied research to focus on how to create the conditions that allow for positive personality development.

3. Is a person's health and well-being influenced by their level of income, or rather by how their income ranks amongst other people (e.g., those in the same community)? If the latter is the case, then this has implications for understanding why the relationship between income and well-being exists, and may offer specific solutions as to how to reduce the negative effects of having a low income.

4. Does losing one pound of income have a proportionally greater impact on well-being than gaining one pound of income? Although intuitively "yes", calculations of the impact of income on well-being currently assume that income gains and losses impact equally on a person or a nation's well-being. This question has relevance to policies that prioritise the avoidance of income losses over stimulating income gains.

5. Do people have lower levels of well-being in less equal societies? Here, we explore whether the influence of positive and negative life events on well-being are different depending upon the level of inequality in a society, and whether this occurs due to low feelings of basic fairness and trust. This would contribute to debates as to the relative costs of allowing income to become more unequally distributed.

The integration within our programme is the focus on showing how psychological characteristics are important for understanding how socio-economic circumstances influence well-being across these five broad areas. Our aim in answering these questions is to; (a) contribute new answers to old theoretical questions in several fields, (b) encourage interdisciplinary collaboration in understanding the impact on well-being of socio-economic events, (c) feed into important policy debates, and (d) suggest an increased role for psychologists to work alongside other social scientists in informing policy in this area.

Whilst primarily academic research, there is strong potential to impact on the global policy shift towards evaluating societal progress and policy through using measures of subjective well-being alongside more traditional indices such as Gross Domestic Product. This process has been highlighted, for example, in the report of the "Commission on the Measurement of Economic Performance and Social Progress" and the "World Happiness Report". Several countries, including Bhutan, France, Luxembourg, and the UK (through the Office of National Statistics), are beginning to regularly measure subjective well-being as a national performance indicator. Once national well-being is measured it is expected to become a target for policymakers who will need to be advised as to the best ways in which such well-being can be increased. Existing social science research will inform this process, through showing how the impact of socio-economic events (such as unemployment or personal and national changes to income) could be expected to influence well-being. More widely, such research is already being used to advise policymakers on how to improve health, as well as proving central to current national debates on, for example, inequality in society (with the research being used by groups ranging from the Occupy movement to the Church of England). Our programme will provide greater information for use in these debates by showing how the impact of socio-economic events varies according to an individual's prior psychological characteristics.

Our individual specific approach to life events research will show the need to develop different policies to improve the well-being of certain groups of people affected by specific events. This would be consistent with the development of a fair and vibrant society, as detailed in the ESRC's Delivery Report 2011-2015. Different policies will be needed if a socio-economic event impacts differently on certain types or groups of individuals; for example, whether specific and identifiable types of individuals suffer more from unemployment than others (perhaps indicating tailored additional support or compensation), or whether losses in income cause proportionately stronger psychological responses than equivalent gains (perhaps suggesting a need to aim for economic growth that is more stable and has less frequent peaks and troughs over equivalent growth that is more volatile). It is essential that such research is produced now so that the time frame is consistent with when policymakers will need this information following the established measurement of national well-being indices. Our approach also has the potential to promote greater interdisciplinary inclusion of psychologists in the ongoing debates, alongside economists and other social scientists.

Banks is uniquely positioned to ensure that impact on this community is achieved through his role as the Deputy Research Director of the Institute of Fiscal Studies (IFS) and well as his prominence in the field. Banks will therefore ensure the policy community impact of this research. To support dialogue with key users, and ensure a diverse representation of views, we will bring together well-being researchers, practitioners, and policymakers through running two end-user workshops. This will not only promote our own research approach, but will also generally foster stronger working partnerships between end-users and the subjective well-being research community.

Given the importance of public involvement in the debate we will further carry out outreach and engagement activities. This will be achieved through proactive media dissemination, extensive e-communication and social networking activities.