Measuring child poverty using a ‘poverty threshold’ has many drawbacks. Thus, this study sought to develop two alternative measures, a material deprivation index and a social exclusion measure. These new measures were developed and tested using data from the first wave of the International Survey of Children's Well-Being in Israel among twelve-year-olds. The results show it is possible to develop child-centered material deprivation and social exclusion measures that are valid and reliable. The measures can help policy makers decide on priorities and create policies that better meet the needs of children.

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The literature examining the relations between economic situation and happiness has focused almost exclusively on a household's income as a proxy for economic situation and, accordingly, also focused chiefly on the adult population, excluding children and adolescents. To fill this gap, this study examines the relation between economic deprivation and happiness by using 2 alternative proxies: material deprivation and social exclusion. The study tests the relation of these measures to the most common measure for happiness-subjective well-being (SWB)-in a sample of Israeli 12-year-olds (N = 1,081). The study also examines the effects of culture and life circumstances on these complex relations. Findings show that both material deprivation and social exclusion are negatively associated with children's SWB. Social exclusion explained a much larger percentage of children's SWB, adding up to 20%. Furthermore, children who were identified as materially deprived and socially excluded were found to be at much greater risk for unhappiness. Material deprivation was found to be significantly more important to the SWB of males compared with females, and for Jews compared with Arabs. Finally, some implications for social policy and regarding the relation of economic situation and happiness are discussed. (PsycINFO Database Record