Two different types of subjective well-being (SWB) measures exhibit a remarkable difference in their correlations with people’s circumstances. The life satisfaction method shows relatively a strong correlation with income and material conveniences while affective measures are more tightly linked with freedom. Why is this so? To explain this difference I examine the cognitive mechanisms underlying these measures by means of dual process theory. This theory identifies two broad categories of cognition. One is Type 1: fast, intuitive, automatic and autonomous. The (...) other is Type 2: slow, deliberate and under conscious control. (They are also known as System 1 and System 2). I argue that in our normal decision making there is a division of labor between these mechanisms. Type 2 is more focused on making choices, comparing material goods and tradeoffs between them, while Type 1 is more oriented at the freedom that is necessary to make those choices. (shrink)