In the economics of happiness, this term (commonly abbreviated to SWB) designates an individual's personal perception of the extent to which they are affected by negative affect (unpleasant moods or emotions) or positive affect (pleasant moods or emotions), and how this influences their overall level of happiness or life satisfaction. Subjective well-being is an individual report about personal quality of life. It can be affected by exterior factors like relationships or health, or interior factors like personality traits.

Subjective well-being is often used as if it is identical to these terms: happiness, well-being, and life satisfaction. In actuality, these terms are distinct but very closely related and so even experts in the field tend to use them interchangeably.