Political Decentralization and Subjective Well-Being: Evidence from Propensity Score Matching Estimates

In recent decades, research on the determinants of human happiness has shifted from a traditional focus on income and consumption to a richer multidimensional approach. This shift has been strongly influenced by a wealth of research that seeks to explain the subjective well-being of citizens by non-economic factors. In this context, the present paper focuses on the particular role of government organization and the form of the State. Specifically, the propensity score matching framework is used to evaluate the impact of political decentralization on subjective well-being using cross-sectional data from 143 countries around the world. Two main de facto measures of political decentralization are considered, namely local autonomy and federalism. Several non-parametric matching methods are used to address self-selection and endogeneity problems which potentially cause a bias in a traditional linear regression. Results show that people consider themselves to be more satisfied with their lives in decentralized States than in those that are centralized, which implies on average that political decentralization has a positive impact on citizens? well-being. Furthermore, sensitivity analysis based on the interaction effect with the political system shows that the parliamentary system compared to the presidential system tends to inhibit the positive well-being impact of decentralization. On the other hand, term limits accentuate this impact.