Agency, Human Dignity, and Subjective Well-being

•We use a novel survey with comprehensive measures of human development in Chile.•We study the relationship between agency, human dignity, and subjective wellbeing accounting for personality traits.•The effect of agency and shame on life satisfaction is comparable to that of income.•We discuss policies to advance agency, and reduce shame and discrimination.•The role of policies that shape stigmatization and group boundaries is emphasized. In the last decades, our understanding of human well-being and development has shifted from a traditional focus on income and consumption toward a richer multidimensional approach. This shift has been strongly influenced by a body of research in subjective well-being (SWB) and the capabilities’ approach, which emphasizes the role of freedom, opportunities, and social inclusion on well-being. Using a novel nationally representative survey of Chilean households, this paper explores the relationship between life satisfaction and two “hidden dimensions” of development, agency, and human dignity. Human agency refers to the capability of an individual to control her destiny and make choices to fulfill goals set autonomously. Human dignity is associated with the absence of feelings of shame and humiliation, and is ultimately related to social inclusion. We use a method that allows to isolate the impact of personality traits affecting both SWB and capabilities’ perceptions. Our results show that agency and shame are important predictors of life satisfaction, comparable in magnitude to the effect of income variables. The fact that capabilities that measure freedoms and social inclusion are aligned with well-being measures lends support to the view of human development as integral process. Policies to advance agency, and reduce shame and discrimination are discussed. In the case of shame and discrimination we emphasize the role of interventions that influence stigmatization and group boundaries.