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Do Large Governments Decrease Happiness?

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  • Sequeira, Tiago
  • Minas, Tiago
  • Ferreira-Lopes, Alexandra

Abstract

Until now there was little evidence of the influence of large governments on happiness and when it existed, it was positive. We show that structural government consumption and other measures of long-term government imbalances significantly decrease happiness and life satisfaction in European countries. In some cases there is evidence of an inverted U-shaped relationship between the Government burden and happiness, for which the negative relationship begin just before the median. This evidence may lead European politicians to reject the idea that bigger Governments lead to higher people satisfaction and to win elections. This result is consistent with people valuing (negatively) expectations for future tax increases, macroeconomic imbalances, and austerity.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 54418.

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Date of creation: 2014
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Handle: RePEc:pra:mprapa:54418

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Keywords: Happiness; Life Satisfaction; Government Size; Fiscal Deficits; Public Debt; Europe;

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  1. M. Ali Choudhary & Paul Levine & Peter McAdam & Peter Welz, 2012. "The happiness puzzle: analytical aspects of the Easterlin paradox," Oxford Economic Papers, Oxford University Press, vol. 64(1), pages 27-42, January.
  2. Rafael Di Tella & Robert MacCulloch, 2005. "Gross National Happiness as an Answer to the Easterlin Paradox?," Macroeconomics, EconWPA 0504027, EconWPA.
  3. Stefano Bartolini & Ennio Bilancini, 2010. "If not only GDP, what else? Using relational goods to predict the trends of subjective well-being," International Review of Economics, Springer, Springer, vol. 57(2), pages 199-213, June.
  4. Hessami, Zohal, 2010. "The Size and Composition of Government Spending in Europe and Its Impact on Well-Being," MPRA Paper 21195, University Library of Munich, Germany.
  5. William R. Hauk & Romain Wacziarg, 2004. "A Monte Carlo Study of Growth Regressions," NBER Technical Working Papers 0296, National Bureau of Economic Research, Inc.
  6. Bernd Hayo & Wolfgang Seifert, 2002. "Subjective Economic Well-Being in Eastern Europe," Development and Comp Systems 0203001, EconWPA.
  7. George MacKerron, 2012. "Happiness Economics From 35 000 Feet," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 26(4), pages 705-735, 09.
  8. Yamamura, Eiji, 2010. "The effects of information asymmetry and government size on happiness: A case study from Japan," MPRA Paper 27182, University Library of Munich, Germany.
  9. Pouwels, Babette & Siegers, Jacques & Vlasblom, Jan Dirk, 2008. "Income, working hours, and happiness," Economics Letters, Elsevier, Elsevier, vol. 99(1), pages 72-74, April.
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