Review of Behavioral Economics > Vol 4 > Issue 4

Happiness and Welfare State Policy Around the World

Kelsey J. O’Connor, University of Southern California, USA,
Suggested Citation
Kelsey J. O’Connor (2017), "Happiness and Welfare State Policy Around the World", Review of Behavioral Economics: Vol. 4: No. 4, pp 397-420.

Published: 20 Dec 2017
© 2017 K. J. O'Connor
Public Economics
JEL Codes: I31I38H11H50P16E60O11
Subjective Well-BeingLife SatisfactionWelfare-State PolicyQuality of GovernanceTransition CountriesLess-DevelopedCountries

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In this article:
1. Introduction
2. Motivation and Past Empirical Results
3. Description of Data and Variables
4. Results and Methods
5. Robustness
6. Conclusions


There is continual debate focusing on government’s role in determining the well-being of its citizens. Should governments expand the generosity of welfare-state policies or reduce their involvement? This question is especially appropriate in less-developed countries with fewer resources to invest. This paper’s findings show welfare-state policy is positively associated with life satisfaction around the world, and the relation holds in subsamples of developed, transition, and less-developed countries. The relation is of similar magnitude as the relation for GDP pc, and is more significant than the relation for quality of governance. The results are based on cross-sectional regressions including 104 countries over the period 2005–2012. Life satisfaction data are from the Gallup World Poll, and welfare-state policy is measured using public social protection expenditures from the International Labor Organization. Previous empirical studies support a positive life satisfaction welfare-state policy relation, but the samples contained few, if any, less-developed countries.



Review of Behavioral Economics, Volume 4, Issue 4 Special Issue: Honoring Richard A. Easterlin
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