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Government vs. Happiness?

Does an increase in the size of government come at the expense of individual happiness? Does limited government increase self-reported measures of the quality of life? A study by three Swiss economists recently posted to SSRN suggests the answer is "yes." In the authors' words: "government involvement is detrimental to individuals' quality of life."

Here is the abstract for the paper, "The Bigger the Better? Evidence of the Effect of Government Size on Life Satisfaction around the World":

This paper empirically analyzes the question whether government involvement in the economy is conducive or detrimental to life satisfaction in a cross-section of 74 countries. This provides a test of a longstanding dispute between standard neoclassical economic theory, which predicts that government plays an unambiguously positive role for individuals' quality of life, and public choice theory, that was developed to understand why governments often choose excessive involvement and regulation, thereby harming voters' quality of life. Our results show that life satisfaction decreases with higher government spending. This negative impact of the government is stronger in countries with a leftwing median voter. It is alleviated by government effectiveness - but only in countries where the state sector is already small.
Although I like the paper's general conclusions, I am skeptical that the findings are particularly robust. Among other things, I doubt the reliability of some of the data, such as results from the World Values Survey, which purports to measure life satisfaction and social trust in various nations. Nonetheless, taken with the appropriate grain(s) of salt, it's an interesting study. It's posted on SSRN here.

Wintermute (www):
Looking at the email policy and how busy people here are, I'm going to ask Senor Non-Volokh to forgive me for proposing a discussion of the following, so someone can start a topic, because this blog will be cited all over for its treatment.

"On July 6 I chose to go to jail to defend my right as a journalist to protect a confidential source, the same right that enables lawyers to grant confidentiality to their clients, clergy to their parishioners, and physicians and psychotherapists to their patients. Though 49 states have extended this privilege to journalists as well, for without such protection a free press cannot exist, there is no comparable federal law. I chose to go to jail not only to honor my pledge of confidentiality, but also to dramatize the need for such a federal law."

-- Judith Miller's farewell address

Please nuke this comment after the topic begins, or immediately if I am too far out of line. I value being here.
11.10.2005 12:31am
therut (mail):
I know the bigger the government the less happy I am. I will give one example from today. Saw a patient in the office. Worked for Wal-mart. Had to fill out a form for his sick days off. Wal-mart has a very efficent(not surprised) one page form, fill in the blank and check boxes type form. I thought this is great. Then the patient hands me the 4 page Department of Labor forms to fill out also. I guess the Feds require this form so they can come in and hassle companies and what I really figure is they will use these to show how all those poor workers really NEED payed family and medical leave. That is the socialist dream.. They only got non-payed family leave when the bill passed but that won't be the end.(And believe me like every other Gov. plan this is abused big time by employees) I also noticed the little box thanking me for my FREE time and stating the govenment has caculated a 10 minute burden for me.. That my friends is just one small episode of tooooo much government!!!!!!!!!!!!
11.10.2005 12:32am
Adam (mail):
I haven't read the paper, but trying to stay as objective as possible given my libertarian biases, welfare-statism causes a mindset of thinking of what one has a right to, which leads to a postmodernist angst. Of course, in countries with a median left-of-center voter, more voters have internalized this approach to life, and so spend their time vaguely worrying about how to get what they're entitled to, or whether they're being denied what is rightfully theirs.

See also "terrorism ccauses happiness", which I would explain in that people living in societies that experience terrorism are less likely to experience such angst.
11.10.2005 2:53am
AppSocRes (mail):
I don't know about the validity of the study, but I'd bet $5 to anyone else's $1 that you won't see an article/segment on this on NYT/WP/ABC/NBC/CBS/NPR/Time/Newsweek/Etc.!
11.10.2005 8:19am
Jason Sorens (www):
There was a study using these same data but a smaller cross-section of countries in APSR a few months ago. It purported to find that bigger government is associated with more life satisfaction! There's one gaping methodological problem with both of these studies, which is why I couldn't believe that APSR published that other paper. The problem is that people answer surveys in different ways. In some countries people might be more inclined to answer questions with extreme responses, while in others there might be more tendency to give moderate responses. In some countries people might think it fine to give responses indicating extreme happiness to others, while in other countries that may be considered a more private matter - and people are less likely to say they are happy even when they really are. For all these reasons, it is impossible to aggregate people's responses to these surveys and come up with some estimate of "total happiness" in a country.
11.10.2005 8:51am
Juan Non-Volokh (mail) (www):
Professor Sorens nails one of the reasons I was initially skeptical about this study. Cultural differences would seem to make these sorts of comparisons extremely difficult, if not impossible. I'd nonetheless be curious to know more about the differences between this study and the prior paper in APSR.
11.10.2005 9:31am
magoo (mail):
Methodological flaws aside, I wonder what the happiness quotient would be if you surveyed only those in the bottom 10 percent of economic spectrum. Does more govt make them happier?
11.10.2005 9:46am
Richard Bellamy (mail):
Also, it is possible that we are mixing up cause and effect. If a population is less happy and has a small government, will it turn to government to try to make them happier, thereby increasing its size?
11.10.2005 10:07am
Anderson (mail) (www):
Well, it depends. Are people happier sleeping on the street without gov't involvement, or in housing projects with gov't involvement?

And what about happiness's being relative to how well others are doing?

Snark aside, anything that purports to measure "happiness" or "satisfaction" is an ideological exercise. We can think of all sorts of reasons why dependence on gov't, or private charity, or whatever, is detrimental besides hooking people up to the Happy-O-Meter.
11.10.2005 10:18am
frankcross (mail):
The happiness studies are of uncertain quality. But talk to Jim Lindgren about the World Values Survey. He knows in great detail how it is misused.

Most of the happiness research (not using WVS) in fact shows that people in high income welfare states are happier. This is consistent with Rawlsian minimax. But all the happiness research is heavily influenced by the relative position effect. I.e., happiness is affected by one's position relative to others, not just one's independent situation
11.10.2005 10:19am
Adam (mail):
There is a new blog on "happiness policy", which recently mentioned the possibility of a "framing effect", i.e., people in countries with larger government may be expecting to be happier, and so they report higher levels of "absolute" happiness as lower subjective happiness.

I would think that this effect would not be of much importance in actually evaluating how happy someone is, however. Even if you are actually experiencing more frequent occurences of well-being, if you don't think that you're happy, then you're not.
11.10.2005 12:13pm
sprice (mail):
I am sure the folks living in FEMA city would say their happiness has skyrocketed since the governemnt took over.
11.10.2005 12:30pm
Joshua (mail):
Of course, proponents of big government will generally tell you that big government is necessary to reduce misery (the opposite of happiness). Whether that is actually true - or even whether reducing misery is quite the same thing as increasing happiness - is debatable, but that is what its proponents tend to believe.
11.10.2005 12:31pm
Jason Sorens (www):
I looked up the other study, and here's the cite: Benjamin Radcliff (2001), 'Politics, Markets, and Life Satisfaction: The Political Economy of Human Happiness,' American Political Science Review 95(4):939-952.

It uses the 1990 wave of the World Values Survey but includes only 15 countries (Austria, Belgium, Canada, Denmark, Finland, France, Germany, Great Britain, Ireland, Italy, Japan, Netherlands, Norway, Sweden, and US). Besides variables for "socialist," "liberal," and "conservative" regime attributes, it uses GDP and unemployment as controls. It also purports to show that countries with left party dominance are happier. I'd forgotten that he also does an analysis on individual-level data for those 15 countries &finds similar results, except that "individualism" is also positive for happiness. Also, consistent with magoo's intuition, the author finds that socialism might be happiness-promoting only among those with low income, less so among those with high income. I am still skeptical of the whole project of interpersonal comparisons of happiness, especially across cultures.
11.10.2005 2:17pm
Barry (mail):
therut, two comments - first, even though this is heresy, we patients feel much more confident of our doctors if they can spell 'paid' properly. It makes us more trusting that our prescriptions for 'whatever-cilin' are for the correct drug. In fact, for the more suspicious among us laymen, it makes us more trusting that one is actually a doctor.

Second, one obvious difference between Wal-Mart and most governments is that Wal-mart has a policy of 'use them up and drive them out'. If a worker has too many sick days (even upaid ones) for their taste, he or she can be fired. [don't bother telling me that this is illegal; so is firing people for organizing a union; so is forcing people to work off the clock; and so is violating federal child labor laws]
11.10.2005 2:31pm
Anderson (mail) (www):
Heck, if "happiness" is the goal, let's just dope everybody up to where they don't care any more. Happiness achieved! Government really works!
11.10.2005 4:30pm
Shelby (mail):
let's just dope everybody up to where they don't care any more

A gram is better than a damn!
11.10.2005 6:01pm
Anderson (mail) (www):
I see that Shelby's on board! "No Taxation Without Medication!"
11.10.2005 6:32pm
therut (mail):
What happens is employees have so many sick days. Once those are used up they are left with unpaid "Family and Medical Leave". To use this properly they are supposed to be significally ill or a family member significally ill that they need at the minimun 3 days off. So they tell me "Hey you have to let me off at least 3 days" even though they need just the one. Happens all the time. Social engineering is always abused and people always find a way around the barriers set up. Plus, I just love the spelling police. There is one on each blog. They seem to reveal themselves when they get angry. Maybe you could just sue me.
11.10.2005 9:49pm
Bottomfish (mail):
From the paper: countries in which government is over 30% of the GDP: Armenia, Azerbaijan, Belarus, Bulgaria, Croatia, Estonia, Georgia, Israel, Jordan, Moldova. The countries in which government is less than 10%: Finland, France, Italy, Japan, New Zealand, Norway, Poland, Singapore, Switzerland, South Korea, Spain, United Kingdom. (The US is 12%.)

Looking at the low-GDP countries, a thought comes to me: is it possible for a country to have an extensive welfare state, but even so, a government with a low percentage of GDP, because most of the people for reasons of their own don't choose to make very extensive use of the government largesse available to them? Would an extensive welfare state in the US work the same way an extensive welfare state in Norway does?
11.11.2005 2:49am
treezycat (mail):
Check out Prof Richard Layard's (LSE) book "Happiness - Lessons from a New Science" (original lectures available here http://cep.lse.ac.uk/events/lectures/layard/RL030303.pdf)
and Prof John Kay (Oxford) comment in the Financial Times in March this year http://www.johnkay.com/political/381. As frankcross and anderson above have said, one of the key determinants of happiness is relative wealth.
11.11.2005 7:39am
lucia (mail) (www):
Magoo asked:
Methodological flaws aside, I wonder what the happiness quotient would be if you surveyed only those in the bottom 10 percent of economic spectrum. Does more govt make them happier?


I wonder too. Let's start this modified study by surveying the poor in France!

Honestly, I suspect the true answer is there is an optimum level of government involvement. Doing a little, is probably better than doing nothing. So, for example, when government limits itself to building sewage treatment facilities, public water, elminating absolute starvation etc. it makes the poor happier than they would have been otherwise.

On other hand, once the government has passed the optimum level of activity, additional involvement just becomes interference in people's lives. Once it's past this level, even the poor become frustrated trying to delve the huge number of rules and regulations that will, and must, inevitably exist to dole out government benefits "fairly".

The difficulty is identifying the optimum level of involvement.
11.11.2005 8:55am
Will Wilkinson (mail) (www):
If you're interested in happiness research, methodological problems thereof, and the public policy upshot of it all, I've got a blog devoted to this and this alone:

http://happinesspolicy.com

Please stop by.
11.11.2005 11:32am
ANM (mail):
Exactly what is "government share?" I'm deeply skeptical of any measure that asserts that France's government intervenes less in the economy than America's or Estonia's.
11.11.2005 5:18pm
qwerty:
The study was not authored by three Swiss economists: one of the authors is a Dane. Sorry, just being a lawyer.
11.11.2005 5:52pm
Bottomfish (mail):
Concerning the statistics for government spending as a percentage of GDP which served as raw material for the study: certainly it's strange the govt portion should be so small for France (8.26%) and Italy (9.77%). Germany is at 11.64% and likewise the rest of Europe is generally small. The US is at 12.83%. Perhaps the reason for this is that the US spends more of GDP for defense than any European nation. That would imply that the authors have made a definite mistake, for military spending is not like welfare spending.
11.11.2005 10:04pm
Tracy W (mail):
Where are you getting these figures from, Bottomfish? In NZ, the national government alone is about 40% of GDP (see the NZ Treasury's website ). And I can hardly imagine Finland, France, Italy, Norway and the United Kingdom having drastically lower government spending than NZ.
11.13.2005 3:51pm
David Gerstman (mail) (www):
That would explain why the Harry Potter books are so dreary! (Thanks to Instapundit!)
11.15.2005 1:09pm
Albany Lawyer Warren Redlich (mail) (www):
Speaking about government's role in the economy/society, wonder if anyone's attempted to measure regulatory impact. It would be hard to measure, but just as an example, traffic enforcement. The US has a fairly rigid system of traffic enforcement with unreasonably low speed limits (I drive an Audi :-) ), and somewhat vigorous enforcement. My experience in Europe was quite different. As an inveterate speeder (recovering), I find this intrusion particularly unpleasant. As a speeding ticket lawyer, it seems that many of my clients feel the same. Apply this across all sorts of regulatory impact and how can you possibly measure that?
11.16.2005 11:31pm