The words “welfare” and “wellbeing” have two very different meanings in economics.
The most familiar meaning to the general public is that Welfare refers to a collection of government programs such as food stamps and Medicare, usually intended to help the poor.
However, economists more often use the word “welfare” in a very different sense–as a synonym for wellbeing. Welfare or wellbeing refer to an overall condition emphasizing happiness and contentment, though also including one’s standard of living in financial or material ways. Welfare in this sense more commonly refers to the condition of an entire country or economy, which is sometimes emphasized by using the phrase “social welfare.” Welfare in the sense of wellbeing turns out to be an easier concept to imagine than to analyze carefully. It is even harder to measure.
Economists have always recognized that not all happiness derives from being financially well off. We all know that being wealthy is not the same as being happy. However, it is rather hard to quantify happiness, and even harder to aggregate happiness across people because people generally have a variety of tastes. Consequently, over the years economists have invented some specialized technical names for happiness, including utility, satisfaction, preferences, tastes, indifference curves, wellbeing, and welfare.
The concept of social welfare sometimes leads to discussions of distribution of income and income inequality.
Well-being, wellbeing, or wellness is the condition of an individual or group. A high level of well-being means that in some sense the individual’s or group’s condition is positive.
Wellness refers to diverse and interconnected dimensions of physical, mental, and social well-being that extend beyond the traditional definition of health. It includes choices and activities aimed at achieving physical vitality, mental alacrity, social satisfaction, a sense of accomplishment, and personal fulfillment.
Well-being is a positive outcome that is meaningful for people and for many sectors of society, because it tells us that people perceive that their lives are going well. Good living conditions (e.g., housing, employment) are fundamental to well-being. Tracking these conditions is important for public policy. However, many indicators that measure living conditions fail to measure what people think and feel about their lives, such as the quality of their relationships, their positive emotions and resilience, the realization of their potential, or their overall satisfaction with life—i.e., their “well-being.”1 Well-being generally includes global judgments of life satisfaction and feelings ranging from depression to joy.