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Formal Institutions and Subjective Well-Being: Revisiting the Cross-Country Evidence

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  • Bjornskov, Christian
  • Fischer, Justina AV
  • Dreher, Axel

Abstract

A long tradition in economics explores the association between the quality of formal institutions and economic performance. The literature on the relationship between such institutions and happiness is, however, rather limited, and inconclusive. In this paper, we revisit the findings from recent cross-country studies on the institutions-happiness association. Our findings suggest that the conclusions reached by previous studies are qualitatively rather insensitive to the specific measure of ‘happiness’ used, while the associations between institutions and subjective well-being differ among poor and rich countries. Separating different types of institutional quality, we find that the effect of economic-judicial institutions on happiness seems to dominate those of political institutions when a sufficient number of developing countries are included in the sample, while analyses restricted to middle- and high-income countries show an additional strong support for a beneficial effect of political institutions. Our results bear important implications which we discuss in the concluding section of the paper. This paper is an update of Bjørnskov, Dreher, Fischer (2008), Formal Institutions and Subjective Well-Being: Revisiting the Cross-Country Evidence, Working Paper Series in Economics and Finance 699, Stockholm School of Economics.

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  • Bjornskov, Christian & Fischer, Justina AV & Dreher, Axel, 2008. "Formal Institutions and Subjective Well-Being: Revisiting the Cross-Country Evidence," MPRA Paper 17159, University Library of Munich, Germany, revised Jul 2009.
    • Handle: RePEc:pra:mprapa:17159
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    More about this item

    Keywords

    Happiness; life satisfaction; quality of life; institutions; democracy; rule of law; political constraints; policy implications;
    All these keywords.

    JEL classification:

    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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