Assessing the Impact of the Size and Scope of Government on Human Well-Being

We examine how public policies affect life satisfaction across the industrial democracies. We consider as indicators of policy overall levels of government spending, the size and generosity of the welfare state, and the degree of labor market regulation. Using individual- and aggregate-level data for OECD countries from 1981 to 2007, we find robust evidence that citizens find life more satisfying as the degree of government intervention in the economy increases. We find, further, that this result is inelastic to changes in income; that is, high- and low-income citizens appear to find more "leftist" social policies equally conducive to their subjective well-being. We conclude with a discussion of the practical and theoretical implications of the results.