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Can policy make us happier? Individual characteristics, socioeconomic factors, and life satisfaction in Central and Eastern Europe

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  • Andrés Rodríguez-Pose

    ()
    (IMDEA Social Sciences Institute)

  • Kristina Maslauskaite

    (College of Europe, Bruges, Belgium)

Abstract

In the last decade, Central and Eastern European (CEE) countries have witnessed a rapid economic convergence vis-à-vis Western Europe. However, this rapid growth has not been matched by a similarly rapid increase in life satisfaction, which has remained low in the European context. This paper sets out to address this conundrum, by looking at the individual and macro-level determinants of individual life satisfaction in ten CEE countries. The results highlight that while Central and Eastern Europeans share the same individual determinants of happiness as people in the West (despite some significant cross-country variation), macroeconomic and institutional differences are the key factors behind the lack of convergence in life satisfaction. On the macroeconomic side, GDP growth is still a source of increasing well-being, but the happiness bonus associated with it is becoming smaller. The different levels of individual happiness in CEE are therefore mostly determined by institutional factors such as corruption, government spending and decentralisation, making policies aimed at enhancing institutional quality capable of bringing about substantial improvements in the overall life satisfaction of the people in the region.

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Bibliographic Info

Paper provided by Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales in its series Working Papers with number 2011-19.

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Date of creation: 10 Nov 2011
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Publication status: Published in Cambridge Journal of Regions Economics and Society 5(1), March 2012: 77-96
Handle: RePEc:imd:wpaper:wp2011-19

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Keywords: Happiness; Convergence; Easterlin paradox; Institutions; Corruption; Decentralisation; Central and Eastern Europe;

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  1. Stefan Voigt & Lorenz Blume, 2012. "The economic effects of federalism and decentralization—a cross-country assessment," Public Choice, Springer, vol. 151(1), pages 229-254, April.
  2. Paul Frijters & Tony Beatton, 2008. "The mystery of the U-shaped relationship between happiness and age," NCER Working Paper Series 26, National Centre for Econometric Research.
  3. Heinz Welsch, 2008. "The welfare costs of corruption," Applied Economics, Taylor & Francis Journals, vol. 40(14), pages 1839-1849.
  4. Luis Diaz-Serrano & Andrés Rodríguez-Pose, 2011. "Decentralization, happiness and the perception of institutions," Working Papers 2011-07, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
  5. Jan Ott, 2010. "Good Governance and Happiness in Nations: Technical Quality Precedes Democracy and Quality Beats Size," Journal of Happiness Studies, Springer, vol. 11(3), pages 353-368, June.
  6. DiTella, Rafael & MacCulloch, Robert & Oswald, Andrew J., 2001. "Preferences over inflation and unemployment: Evidence from surveys of happiness," ZEI Working Papers B 03-2001, ZEI - Center for European Integration Studies, University of Bonn.
  7. Sergei Guriev & Ekaterina Zhuravskaya, 2009. "(Un)happiness in Transition," Journal of Economic Perspectives, American Economic Association, vol. 23(2), pages 143-68, Spring.
  8. Kaisa Kotakorpi & Jani-Petri Laamanen, 2010. "Welfare State and Life Satisfaction: Evidence from Public Health Care," Economica, London School of Economics and Political Science, vol. 77(307), pages 565-583, 07.
  9. Lelkes, Orsolya, 2006. "Knowing what is good for you: Empirical analysis of personal preferences and the "objective good"," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 35(2), pages 285-307, April.
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