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Happiness and Economic Systems

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Abstract

Various international comparisons of subjective well-being show that the average level of happiness in a nation is significantly related to its political institutions. Examining a sample of industrialised market economics, this paper explores whether the same relationship holds for economic institutions as well. Holding other determinants of happiness constant, no significant relationships between happiness and type of economic system are found. Some conjectures explaining this asymmetry between happiness and economic and political systems are explored.

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Notes

  1. www.worlddatabaseofhappiness.eur.nl/.

  2. For instance, by Ouweenel and Veenhoven (1991), Diener and Diener (1996), Diener and Lucas (1999), Diener and Suh (2000a, 2000b), Veenhoven (1999, 2000, 2008), Frey (2008) and many others. Diener et al. (2005) explore some cultural differences.

  3. Although the designated economic systems may be related to certain cultural or other differences, they should be interpreted solely as an economic phenomenon. This approach allows a more comprehensive overview of the economic system than partial indicators such as the type of legal system, ‘economic freedom’, or particular economic policies.

  4. Some may feel that as the components are difficult to interpret, I should simply pick one or two of the most promising possible causes and forget about the rest. But this does not allow us to get around the problem discussed above in the text that happiness may be related to cause Q when regressed alone, but not to cause Q if cause R is also included in the analysis.

  5. The minimal impact of per capita GDP is discussed from different viewpoints by Brickman et al. (1978) and Diener and Diener (1996); a contrary view is expressed by Stevenson and Wolfers (2008).

  6. In preliminary research I examined the impact of several more components, but obtained the same negative results. I also carried out a similar analysis for the inequality of happiness and for the inequality adjusted average level of happiness, but found nothing worth reporting.

  7. The one exception is that for the countries with a South European economic system, a higher concentration of corporate ownership led to greater happiness. This result has little meaning and, given the number of regressions that I ran, it could be the result of pure chance.

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Acknowledgements

I thank David Huffman, Charlotte Phelps, Victoria Wilson-Schwarz, and several anonymous referees for helpful comments on a previous draft of this paper.

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  1. Economics Department, Swarthmore College, 500 College Avenue, Swarthmore, 19081, PA, USA

    Frederic Pryor

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Pryor, F. Happiness and Economic Systems. Comp Econ Stud 51, 367–383 (2009). https://doi.org/10.1057/ces.2009.5

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