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Home > economics, philosophy > Happiness and the Size of Government

Happiness and the Size of Government

Over at Big Think, Will Wilkinson points out some highlights of a new book on happiness research. Here’s an excerpt on the connection between subjective well-being and the size of government:

What appears to be the unequivocal conclusion to be drawn from the sober, scientific part of the wellbeing literature is that larger government does not imply a happier population. Indeed, when a growing battalion of social scientists sympathetic to government interventions engage in wellbeing research and fail to find empirical evidence in favour of such interventions, it seems safe to conclude that more or larger government is not associated with better wellbeing. As Ruud Veenhoven honestly concluded againsthis own political preferences more than a decade ago, the characteristics of welfare states neither create wellbeing, nor do they make the distribution of such wellbeing more equal (Veenhoven, 2000). A further decade of research has confirmed this conclusion despite popular claims that government interventions can and do create happiness.

On the contrary, the large and growing literature finds either no consequences of government policies or direct negative effects of large government (cf. Bjørnskov et al., 2008a, 2008b). Yet even if there are no direct effects, there is reason to worry that increasing the size of the government sector and its active role in society could cause losses of happiness in the long run. As documented by Sacks, Stevenson and Wolfers in this volume, economic growth leads to happiness in the long run. Likewise, economic globalisation also tends to contribute to subjective wellbeing (see Tsai, 2009). Activist government policies and a growing public sector are likely to undermine both growth and globalisation (e.g. Fölster and Henrekson, 2001; Bergh and Henrekson,2011), and thus slow down what is already a slow trend towards more wellbeing that may be difficult to track in rich countries.

As such, the apparently popular case for an active government that creates happiness rests on very shaky foundations.

Interesting stuff to say the least. The book is published by The Institution for Economic Affairs, a British free-market think-tank. It can be download for free right here.

Image via Lifelong Happiness

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  1. January 22, 2012 at 2:27 pm

    Interesting post. I’ll have to read the rest of the book. How would you explain this?

    http://www.msnbc.msn.com/id/43287918/ns/business-world_business/t/us-doesnt-make-cut-happiest-nations-list/#.TxxilKXOV2A

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  2. January 23, 2012 at 12:55 pm

    I think the homogeneity of the nordic societies explain their happiness despite having robust welfare states.

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  3. January 23, 2012 at 1:41 pm

    Would you say that inhabitants of “nordic societies” would be more or less happy without “robust welfare state”?

    The reason I ask is because your comment seems to undermine the point Wilkinson is attempting to make.

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  4. January 23, 2012 at 1:42 pm

    Reblogged this on .

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  5. January 23, 2012 at 2:20 pm

    I don’t think it would actually make a difference as Scandinavian happiness isn’t a result of the welfare state. Nordic countries have a sort of self-policing regarding the welfare state as strong social pressures exist to limit abuse of the welfare state. I’m skeptical that a causal relationship exists between happiness and the welfare state in Scandinavia. Egalitarian outcomes in Scandinavia preceded the welfare state. See below…

    http://super-economy.blogspot.com/2011/01/breaking-matt-yglesias-heart.html

    “Scandinavians score unbelievably high on things such as work ethic, trustworthiness and cooperation. This interpretation of causality is different: Scandinavians has a large welfare state because they are homogeneous and culturally unique. When other countries (say, southern Europe) copy Nordic policies, the results tend to be worse, because the population is different.”

    http://www.newgeography.com/content/001543-is-sweden-a-false-utopia

    “Rather than being guinea pigs in a progressive experiment in social engineering, Swedes are a unique people with a long history. Therefore, we should question the lazy assumption that good Swedish outcomes (long life expectancies, social equality) are due to particular Scandinavian policies (the welfare state).

    After all, even before the high-tax welfare state, Sweden was characterized by an even distribution of income, low poverty and long life spans, the same phenomena that today are said to be the result of high-tax welfare policies. In 1950, before the high-tax welfare state, Swedes lived 2.6 years longer than Americans. Today the difference is 2.7 years.

    A more reasonable view of why Sweden performs well on many social metrics has its basis in history and sociology: Swedes have for hundreds of years benefited from sound low-level institutions, such as a strong work ethic and high levels of trust and cooperation.”

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