IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

Who Benefits from Economic Freedom? Unraveling the Effect of Economic Freedom on Subjective Well-Being

  • Gehring, Kai
Registered author(s):

    Who benefits from economic freedom? Results from a panel of 86 countries over the 1990–2005 period suggest that overall economic freedom has a significant positive effect on subjective well-being. Its dimensions legal security and property rights, sound money, and regulation are in particular strong predictors of higher well-being. The overall positive effect is not affected by socio-demographics; the effects of individual dimensions vary, however. Developing countries profit more from higher economic freedom, in particular from reducing the regulatory burden. Culture moderates the effect: societies that are more tolerant and have a positive attitude toward the market economy profit the most.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://www.sciencedirect.com/science/article/pii/S0305750X13001150
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Article provided by Elsevier in its journal World Development.

    Volume (Year): 50 (2013)
    Issue (Month): C ()
    Pages: 74-90

    as
    in new window

    Handle: RePEc:eee:wdevel:v:50:y:2013:i:c:p:74-90
    DOI: 10.1016/j.worlddev.2013.05.003
    Contact details of provider: Web page: http://www.elsevier.com/locate/worlddev

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as in new window
    1. Rafael Di Tella & Robert MacCulloch, 2005. "Partisan Social Happiness," Review of Economic Studies, Oxford University Press, vol. 72(2), pages 367-393.
    2. Rabin, Matthew, 1997. "Psychology and Economics," Department of Economics, Working Paper Series qt8jd5z5j2, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    3. DiTella, Rafael & MacCulloch, Robert & Oswald, Andrew J., 2001. "Preferences over inflation and unemployment: Evidence from surveys of happiness," ZEI Working Papers B 03-2001, University of Bonn, ZEI - Center for European Integration Studies.
    4. John Helliwell, 2007. "Well-Being and Social Capital: Does Suicide Pose a Puzzle?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 81(3), pages 455-496, May.
    5. Ovaska, Tomi & Takashima, Ryo, 2006. "Economic policy and the level of self-perceived well-being: An international comparison," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 35(2), pages 308-325, April.
    6. Sam Peltzman, 2010. "Regulation And The Natural Progress Of Opulence," Economic Affairs, Wiley Blackwell, vol. 30(2), pages 33-39, 06.
    7. Ada Ferrer-i-Carbonell & Paul Frijters, 2004. "How Important is Methodology for the estimates of the determinants of Happiness?," Economic Journal, Royal Economic Society, vol. 114(497), pages 641-659, 07.
    8. Nathan J. Ashby & Russell S. Sobel, 2006. "Income Inequality and Economic Freedom in the U.S. States," Working Papers 06-08 Classification-, Department of Economics, West Virginia University.
    9. Bjørnskov, Christian & Drehe, Axel & Fischer, Justina A.V., 2008. "On decentralization and life satisfaction," Economics Letters, Elsevier, vol. 99(1), pages 147-151, April.
    10. Carlsson, Fredrik & Lundström, Susanna, 2001. "Economic Freedom and Growth:Decomposing the Effects," Working Papers in Economics 33, University of Gothenburg, Department of Economics.
    11. Verme, Paolo, 2009. "Happiness, freedom and control," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 146-161, August.
    12. Ruut Veenhoven & Michael Hagerty, 2006. "Rising Happiness in Nations 1946–2004: A Reply to Easterlin," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 79(3), pages 421-436, December.
    13. Friedman, Milton, 2002. "Capitalism and Freedom," University of Chicago Press Economics Books, University of Chicago Press, number 9780226264202, July.
    14. Alesina, Alberto F & Di Tella, Rafael & MacCulloch, Robert, 2001. "Inequality and Happiness: Are Europeans and Americans Different?," CEPR Discussion Papers 2877, C.E.P.R. Discussion Papers.
    15. Di Tella, Rafael & Haisken-De New, John & MacCulloch, Robert, 2010. "Happiness adaptation to income and to status in an individual panel," Journal of Economic Behavior & Organization, Elsevier, vol. 76(3), pages 834-852, December.
    16. Haan, Jakob de & Sturm, Jan-Egbert, 1999. "On the relationship between economic freedom and economic growth," CCSO Working Papers 199903, University of Groningen, CCSO Centre for Economic Research.
    17. Roland Vaubel, 1996. "Bureaucracy at the IMF and the World Bank: A Comparison of the Evidence," The World Economy, Wiley Blackwell, vol. 19(2), pages 195-210, 03.
    18. Bjornskov, Christian & Dreher, Axel & Fischer, Justina AV, 2008. "Formal Institutions and Subjective Well-Being: Revisiting the Cross-Country Evidence," MPRA Paper 20488, University Library of Munich, Germany, revised 06 Feb 2010.
    19. Stroup, Michael D., 2007. "Economic Freedom, Democracy, and the Quality of Life," World Development, Elsevier, vol. 35(1), pages 52-66, January.
    20. Christian Bjørnskov & Axel Dreher & Justina A.V. Fischer & Jan Schnellenbach, 2010. "Inequality and happiness: When perceived social mobility and economic reality do not match," CEIS Research Paper 173, Tor Vergata University, CEIS, revised 08 Nov 2010.
    21. Christian Bjørnskov & Axel Dreher & Justina A. V. Fischer, 2005. "The bigger the better? Evidence of the effect of government size on life satisfaction around the world," CER-ETH Economics working paper series 05/44, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    22. Daniel M. Gropper, Robert A. Lawson, and Jere T. Thorne Jr., 2011. "Economic Freedom and Happiness," Cato Journal, Cato Journal, Cato Institute, vol. 31(2), pages 237-255, Spring/Su.
    23. George A. Akerlof, 2009. "How Human Psychology Drives the Economy and Why It Matters," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(5), pages 1175-1175.
    24. Fischer, Justina AV, 2010. "Accounting for Unobserved Country Heterogeneity in Happiness Research: Country Fixed Effects versus Region Fixed Effects," MPRA Paper 22272, University Library of Munich, Germany.
    25. Betsey Stevenson & Justin Wolfers, 2008. "Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 39(1 (Spring), pages 1-102.
    26. Bryan Caplan & Tyler Cowen, 2004. "Do We Underestimate the Benefits of Cultural Competition?," American Economic Review, American Economic Association, vol. 94(2), pages 402-407, May.
    27. Sacks, Daniel W. & Stevenson, Betsey & Wolfers, Justin, 2010. "Subjective Well-Being, Income, Economic Development and Growth," CEPR Discussion Papers 8048, C.E.P.R. Discussion Papers.
    28. Easterlin, Richard A., 1995. "Will raising the incomes of all increase the happiness of all?," Journal of Economic Behavior & Organization, Elsevier, vol. 27(1), pages 35-47, June.
    29. G. Warren Nutter & Israel Borenstein & Adam Kaufman, 1962. "Growth of Industrial Production in the Soviet Union," NBER Books, National Bureau of Economic Research, Inc, number nutt62-1, March.
    30. Rafael Di Tella & Robert MacCulloch, 2005. "Gross National Happiness as an Answer to the Easterlin Paradox?," Macroeconomics 0504027, EconWPA.
    31. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
    32. Caplan, Bryan, 2001. "Rational Irrationality and the Microfoundations of Political Failure," Public Choice, Springer, vol. 107(3-4), pages 311-31, June.
    33. Tideman, T Nicolaus & Tullock, Gordon, 1976. "A New and Superior Process for Making Social Choices," Journal of Political Economy, University of Chicago Press, vol. 84(6), pages 1145-59, December.
    34. Justesen, Mogens K., 2008. "The effect of economic freedom on growth revisited: New evidence on causality from a panel of countries 1970-1999," European Journal of Political Economy, Elsevier, vol. 24(3), pages 642-660, September.
    35. Romer, Paul, 1994. "New goods, old theory, and the welfare costs of trade restrictions," Journal of Development Economics, Elsevier, vol. 43(1), pages 5-38, February.
    36. William Easterly, 2008. "Institutions: Top Down or Bottom Up?," American Economic Review, American Economic Association, vol. 98(2), pages 95-99, May.
    37. Bruno Frey & Alois Stutzer, 2010. "Happiness and public choice," Public Choice, Springer, vol. 144(3), pages 557-573, September.
    38. G. Warren Nutter & Israel Borenstein & Adam Kaufman, 1962. "Introduction to "Growth of Industrial Production in the Soviet Union"," NBER Chapters, in: Growth of Industrial Production in the Soviet Union, pages 3-10 National Bureau of Economic Research, Inc.
    39. Hugo Faria & Hugo Montesinos, 2009. "Does economic freedom cause prosperity? An IV approach," Public Choice, Springer, vol. 141(1), pages 103-127, October.
    40. Anthony Downs, 1957. "An Economic Theory of Political Action in a Democracy," Journal of Political Economy, University of Chicago Press, vol. 65, pages 135.
    41. Alfredo Esposto & Peter Zaleski, 1999. "Economic Freedom and the Quality of Life: An Empirical Analysis," Constitutional Political Economy, Springer, vol. 10(2), pages 185-197, June.
    42. repec:cto:journl:v:18:y:1998:i:2:p: is not listed on IDEAS
    43. Martin Rode, 2013. "Do Good Institutions Make Citizens Happy, or Do Happy Citizens Build Better Institutions?," Journal of Happiness Studies, Springer, vol. 14(5), pages 1479-1505, October.
    44. Bernard M.S. van Praag & Paul Frijters, 1999. "The measurement of welfare and well-being; the Leyden approach," School of Economics and Finance Discussion Papers and Working Papers Series 071a, School of Economics and Finance, Queensland University of Technology.
    45. Dolan, Paul & Peasgood, Tessa & White, Mathew, 2008. "Do we really know what makes us happy A review of the economic literature on the factors associated with subjective well-being," Journal of Economic Psychology, Elsevier, vol. 29(1), pages 94-122, February.
    46. Berggren, Niclas, 1999. "Economic Freedom and Equality: Friends or Foes?," Public Choice, Springer, vol. 100(3-4), pages 203-23, September.
    47. Tullock, Gordon, 1998. "Externalities and Government," Public Choice, Springer, vol. 96(3-4), pages 411-15, September.
    48. Paul H. Rubin, 2003. "Folk Economics," Southern Economic Journal, Southern Economic Association, vol. 70(1), pages 157-171, July.
    49. Scully, Gerald W, 2002. "Economic Freedom, Government Policy and the Trade-Off between Equity and Economic Growth," Public Choice, Springer, vol. 113(1-2), pages 77-96, October.
    50. John F. Helliwell, 2006. "Well-Being, Social Capital and Public Policy: What's New?," Economic Journal, Royal Economic Society, vol. 116(510), pages C34-C45, 03.
    51. Jianakoplos, Nancy Ammon & Bernasek, Alexandra, 1998. "Are Women More Risk Averse?," Economic Inquiry, Western Economic Association International, vol. 36(4), pages 620-30, October.
    52. Seth W. Norton, 1998. "Poverty, Property Rights, and Human Well-Being: A Cross-National Study," Cato Journal, Cato Journal, Cato Institute, vol. 18(2), pages 233-245, Fall.
    53. Gordon Tullock, 1959. "Problems of Majority Voting," Journal of Political Economy, University of Chicago Press, vol. 67, pages 571.
    54. Baltagi, Badi H. & Wu, Ping X., 1999. "Unequally Spaced Panel Data Regressions With Ar(1) Disturbances," Econometric Theory, Cambridge University Press, vol. 15(06), pages 814-823, December.
    55. Caplan, Bryan, 2001. "Rational Ignorance versus Rational Irrationality," Kyklos, Wiley Blackwell, vol. 54(1), pages 3-26.
    56. Berggren, Niclas, 2003. "The Benefits of Economic Freedom: A Survey," Ratio Working Papers 4, The Ratio Institute.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:eee:wdevel:v:50:y:2013:i:c:p:74-90. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.