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Happiness, Economic Well-being, Social Capital and the Quality of Institutions

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  • Gabriel Leite Mota
  • Paulo Trigo Pereira

Abstract

Since Jeremy Bentham, utilitarians have argued that happiness, not just income or wealth, is the maximand of individual and social welfare. By contrast, Rawls and followers argue that to share a common perception of living in a just society is the “ultimate good” and that individuals have a moral ability to evaluate just institutions. In this paper we argue that just institutions, apart from their intrinsic value, also have an instrumental value, both in economic performance and in happiness. Thus happiness -- or subjective well being -- is analyzed as being a function of economic well-being, the quality of public institutions and social ties. Cross section individual data from citizens in OECD countries show that income, education and the perceived quality of institutions have the highest impact on life satisfaction, followed by social capital. Country analysis shows a non linear but positive influence of per capita GDP on life satisfaction, but also that unemployment and inflation reduce average happiness, the former effect being stronger. Finally, better quality public institutions and having more social capital also bring more happiness. We conclude with some policy implications.

Suggested Citation

  • Gabriel Leite Mota & Paulo Trigo Pereira, 2008. "Happiness, Economic Well-being, Social Capital and the Quality of Institutions," Working Papers Department of Economics 2008/40, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
  • Handle: RePEc:ise:isegwp:wp402008
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    Cited by:

    1. Gelsomina Catalano & Davide Sartori, 2013. "Infrastructure investment long term contribution: Economic development and wellbeing," Working Papers 201301, CSIL Centre for Industrial Studies.

    More about this item

    Keywords

    Happiness; Democracy; Social Capital; Quality of Institutions;

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D69 - Microeconomics - - Welfare Economics - - - Other
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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