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Institutional Origins of Subjective Well-Being: Estimating the Effects of Economic Freedom on National Happiness

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  • Rok Spruk

    () (Utrecht University)

  • Aleskandar Kešeljević

    () (University of Ljubljana)

Abstract

Abstract We exploit the cross-country differences in economic freedom to examine the link between the quality of institutions and subjective well-being. Using Veenhoven’s happiness dataset, the evidence suggests countries with better economic institutions and higher level of economic freedom, captured by the security of property rights, open markets and more limited government, are significantly more likely to experience greater subjective well-being after controlling for structural confounders of national subjective well-being such as income, unemployment, inequality, social capital and life satisfaction. The effect of institutions on cross-national happiness is both significant and robust to different model specifications, estimation techniques and possible sources of endogeneity. Furthermore, our panel data analysis reveals that over time higher levels of economic freedom are associated with decreasing subjective well-being after controlling for state dependence and income.

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  • Rok Spruk & Aleskandar Kešeljević, 2016. "Institutional Origins of Subjective Well-Being: Estimating the Effects of Economic Freedom on National Happiness," Journal of Happiness Studies, Springer, vol. 17(2), pages 659-712, April.
  • Handle: RePEc:spr:jhappi:v:17:y:2016:i:2:d:10.1007_s10902-015-9616-x
    DOI: 10.1007/s10902-015-9616-x
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    Cited by:

    1. Sergei Guriev & Ekaterina Zhuravskaya, 2009. "(Un)happiness in Transition," Journal of Economic Perspectives, American Economic Association, vol. 23(2), pages 143-168, Spring.
    2. Bennett, Daniel & Nikolaev, Boris & Aidt, Toke, 2016. "Institutions & Well-being," MPRA Paper 78436, University Library of Munich, Germany.
    3. repec:spr:jhappi:v:18:y:2017:i:4:d:10.1007_s10902-016-9770-9 is not listed on IDEAS
    4. Nikolova, Milena, 2016. "Minding the happiness gap: Political institutions and perceived quality of life in transition," European Journal of Political Economy, Elsevier, vol. 45(S), pages 129-148.

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