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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.

Suggested Citation

  • Sequeira, Tiago & Minas, Tiago & Ferreira-Lopes, Alexandra, 2014. "Do Large Governments Decrease Happiness?," MPRA Paper 54418, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:54418
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    References listed on IDEAS

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    More about this item

    Keywords

    Happiness; Life Satisfaction; Government Size; Fiscal Deficits; Public Debt; Europe;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • D60 - Microeconomics - - Welfare Economics - - - General
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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