Effects of Economic Freedom on Subjective Well-Being
DOI:
https://doi.org/10.47743/saeb-2023-0015Keywords:
subjective well-being, economic freedom, SHARE, ologit, life satisfaction.Abstract
Are people more likely to be satisfied with their lives if they had freedom from regulations, if they had the ability to trade freely internationally? In light of the demographic aging phenomenon we are facing, the present study analyzes the relationship between economic freedom and life satisfaction among European older adults. In order to do so, we are using data from the European Health, Ageing, and Retirement Survey and Economic Freedom of the World. By using the ordered logit regression method, we estimated different models to identify how sub-indicators of economic freedom affect the subjective well-being. According to the findings, the quality of the institutions that define the legal system and establish rules for the protection of private property and sound monetary policy have a positive effect on subjective well-being. On the other hand, openness to international trade has a negative effect and government and regulation doesn’t show any significance.
References
Arikan, G. (2011). Economic individualism and government spending. World Values Research, 4(3), 73-95.
Benz, M., & Frey, B. S. (2003). The Value of Autonomy: Evidence from the Self-Employed in 23 Countries. IEW - Working Papers, 173. Retrieved from https://ideas.repec.org/p/zur/iewwpx/173.html
Benz, M., & Frey, B. S. (2008). Being independent is a great thing: Subjective evaluations of self-employment and hierarchy. Economica, 75(298), 362-383. http://dx.doi.org/10.1111/j.1468-0335.2007.00594.x
Bjørnskov, C., Dreher, A., & Fischer, J. A. (2010). Formal institutions and subjective well being: Revisiting the cross-country evidence. European Journal of Political Economy, 26(4), 419-430. http://dx.doi.org/10.1016/j.ejpoleco.2010.03.001
Bjørnskov, C., & Foss, N. J. (2008). Economic Freedom and Entrepreneurial Activity: Some Cross Country Evidence. Public Choice, 134(3-4), 307-328. http://dx.doi.org/10.1007/s11127-007-9229-y
Börsch-Supan, A. (2021). Survey of Health, Ageing and Retirement in Europe (SHARE) Wave 8. Release version: 1.0. 0. SHARE-ERIC. Data set.
Börsch-Supan, A., Brandt, M., Hunkler, C., Kneip, T., Korbmacher, J., Malter, F., . . . Share Central Coordination Team. (2013). Data Resource Profile: The Survey of Health, Ageing and Retirement in Europe (SHARE). International Journal of Epidemiology, 42(4), 992-1001. http://dx.doi.org/10.1093/ije/dyt088
Che, Y., Lu, Y., Pierce, J. R., Schott, P. K., & Tao, Z. (2017). Did trade liberalization with China influence US elections? NBER Working Paper, 1-68. Retrieved from https://www.lebow.drexel.edu/sites/default/files/event/1555959493-paper-dr-justin-pierce.pdf
Clark, A. E., & Oswald, A. J. (1994). Unhappiness and unemployment. Economic Journal (London), 104(424), 648-659. http://dx.doi.org/10.2307/2234639
Compen, B., Graafland, J. J., & van Damme, E. E. C. (2012). On the relationship between economic freedom, life satisfaction, economic growth, social trust, and income inequality: a cross country analysis. (Master Thesis in Economics), University of Tilburg. Retrieved from http://arno.uvt.nl/show.cgi?fid=121773
Cornia, G. A. (2004). Inequality, Growth and Poverty in the Era of Liberalization and Globalization (G. A. Cornia Ed.). New York: Oxford University Press. http://dx.doi.org/10.1093/0199271410.001.0001
Dawson, J. W. (2003). Causality in the freedom–growth relationship. European Journal of Political Economy, 19(3), 479-495. http://dx.doi.org/10.1016/S0176-2680(03)00009-0
De Haan, J., & Sturm, J. E. (2006). How to handle economic freedom: Reply to Lawson. Econ Journal Watch, 3(3), 407-411.
Diener, E., Lucas, R. E., & Oishi, S. (2002). Sujective well-being: The science of happiness and life satisfaction. In C. R. Snyder & S. J. Lopez (Eds.), Handbook of positive psychology. (Vol. 2, pp. 63-73). New York: Oxford University Press.
Esposto, A. G., & Zaleski, P. A. (1999). Economic freedom and the quality of life: An empirical analysis. Constitutional Political Economy, 10(2), 185-197. http://dx.doi.org/10.1023/A:1009068829135
Gehring, K. (2013). Who benefits from economic freedom? Unraveling the effect of economic freedom on subjective well-being. World Development, 50(October), 74-90. http://dx.doi.org/10.1016/j.worlddev.2013.05.003
Goldsmith, A. A. (1997). Economic rights and government in developing countries: Cross-national evidence on growth and development. Studies in Comparative International Development, 32(2), 29-44. http://dx.doi.org/10.1007/BF02687323
Graafland, J. (2020). When Does Economic Freedom Promote Well Being? On the Moderating Role of Long‑Term Orientation. Social Indicators Research, 149(1), 127-153. http://dx.doi.org/10.1007/s11205-019-02230-9
Graafland, J., & Compen, B. (2012). Economic Freedom and Life Satisfaction: A Cross Country Analysis. CentER Discussion Paper Series, (2012-038). Retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2057751 http://dx.doi.org/10.2139/ssrn.2057751
Graafland, J., & Lous, B. (2018). Economic freedom, income inequality and life satisfaction in OECD countries. Journal of Happiness Studies, 19(7), 2071-2093. http://dx.doi.org/10.1007/s10902-017-9905-7
Gwartney, J., Lawson, R., & Hall, J. (2012). Economic Freedom of the World: 2012 Annual Report. Retrieved from https://www.fraserinstitute.org/sites/default/files/economic-freedom-of-the-world-2012-rev.pdf
Gwartney, J., Lawson, R., Hall, J., & Murphy, R. (2021). Economic Freedom of the World: 2021 Annual Report. Retrieved from https://www.fraserinstitute.org/sites/default/files/economic-freedom-of-the-world-2021.pdf
Gwartney, J., Lawson, R., Hall, J., & Murphy, R. (2022). Economic Freedom of the World: 2022 Annual Report. Retrieved from https://www.fraserinstitute.org/sites/default/files/economic-freedom-of-the-world-2022.pdf
Hall, J. C., & Lawson, R. A. (2014). Economic freedom of the world: An accounting of the literature. Contemporary Economic Policy, 32(1), 1-19. http://dx.doi.org/10.1111/coep.12010
Lawson, R. (2022). Economic Freedom in the Literature: What Is It Good (Bad) For? In J. Gwartney, R. Lawson, J. Hall, & R. Murphy (Eds.), Economic Freedom of the World: 2022 Annual Report (pp. 187-199): Fraser Institute.
Le Roux, J., & Roma, M. (2018). Recent house price increases and housing affordability. ECB Economic Bulletin, 1(1), 29-34. Retrieved from https://www.ecb.europa.eu//pub/pdf/other/ebbox201801_03.en.pdf
Nikolaev, B. (2013). Economic freedom and subjective well-being–revisiting the evidence. Unpublished manuscript.
Nikolaev, B., & Bennett, D. L. (2016). Give me liberty and give me control: Economic freedom, control perceptions and the paradox of choice. European Journal of Political Economy, 45(December), 39-52. http://dx.doi.org/10.1016/j.ejpoleco.2015.12.002
Ovaska, T., & Takashima, R. (2006). Economic policy and the level of self-perceived wellbeing: An international comparison. Journal of Socio-Economics, 35(2), 308-325. http://dx.doi.org/10.1016/j.socec.2005.11.054
Rode, M. (2013). Do good institutions make citizens happy, or do happy citizens build better institutions? Journal of Happiness Studies, 14(5), 1479-1505. http://dx.doi.org/10.1007/s10902-012-9391-x
Rode, M., Knoll, B., & Pitlik, H. (2013). Economic Freedom of the World: 2013 Annual Report: Fraser Institute.
Spruk, R., & Kešeljević, A. (2016). Institutional origins of subjective well-being: Estimating the effects of economic freedom on national happiness. Journal of Happiness Studies, 17(2), 659-712. http://dx.doi.org/10.1007/s10902-015-9616-x
Veenhoven, R. (2000). Freedom and happiness: A comparative study in forty-four nations in the early 1990s. In E. Diener & E. M. Suh (Eds.), Culture and subjective well-being. (pp. 257-288). Cambridge, MA, US: MIT Press. http://dx.doi.org/10.1007/978-90-481-2352-0_2
Verme, P. (2009). Happiness, freedom and control. Journal of Economic Behavior & Organization, 71(2), 146-161. http://dx.doi.org/10.1016/j.jebo.2009.04.008
World Bank. (2006). World development report 2006: Equity and Development Retrieved from https://rb.gy/2jhutc
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2022 Alexandra-Cristina Sirbu, Andreea-Oana Iacobuță-Mihăiță, Mircea Asandului, Madalina-Maria Brezuleanu
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
All accepted papers are published on an Open Access basis.
The Open Access License is based on the Creative Commons license.
The non-commercial use of the article will be governed by the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License as currently displayed on https://creativecommons.org/licenses/by-nc-nd/4.0
Under the Creative Commons Attribution-NonCommercial-NoDerivatives license, the author(s) and users are free to share (copy, distribute and transmit the contribution) under the following conditions:
1. they must attribute the contribution in the manner specified by the author or licensor,
2. they may not use this contribution for commercial purposes,
3. they may not alter, transform, or build upon this work.
This work is licenced under a 
