Article summary with Assessing the impact of the size and scope of government on human well-being by Flavin et al.

What is this article about?

This article is a research review about how public policies affect life satisfaction across the industrial democracies. Government spending, the size and generosity of the welfare state, and the degree of labor market regulation are considered as indicators of policy. There is evidence for the idea that citizens find life more satisfying as the degree of government intervention in the economy increases. This result is inelastic to changes in income.

What is examined?

Capitalism has come to structure not only economic production and exchange, but also the wider social order. There remains significant disagreement over the extent to which market forces should be allowed. This research is focused on the size and scope of government because of the presumed ultimate impact on the quality of life. In this paper the attention is thus not on any of the individual or particular effects of market interventions, but on quality of life itself. This type of empirical investigation is now possible because there is enough sophisticated literature devoted to the study of life satisfaction.

A growing sociology literature documents a relationship between greater government intervention into the economy and lower levels of poverty, inequality, and unemployment. At the same time, a second, related set of studies show a relationship between lower levels of poverty, inequality, and unemployment and higher levels of subjective well-beings.

What data and methods are used?

The World Values Surveys (WVS) are used. The dependent variable, self-reported life satisfaction is measured using the following survey question: "All things considered, how satisfied are you with your life as a whole these days?"

The principal independent variable is a measure of the degree of government intervention into the market economy. There is considerable scholarly debate about how to accurately quantify the size and scope of government interventions, so there are four different measures that are being used:

• The size of government, measured as the government's consumption share of a country's GDP.
• A country's total social welfare expenditures as z percentage of its GDP.
• A time-serial extension by Scruggs of the decommodification index, originally from Esping-Andersen, that measures welfare state generosity.
• The degree of labor market regulation, measured as an index of the overall level of "Employment Protection Legislation".

The relationship is analyzed in two ways. First, satisfaction is modeled as a function of the four measures of government intervention. Second, the mean level of life satisfaction for each country-wave in the survey is evaluated and modeled as a function of national-level factors using a random effects regression framework.

What are the results?

All four coefficients for government intervention are positive and statistically different from zero. As the degree of government intervention increases, individuals' subjective well-being increases as well. The magnitude of the effect is quite large but varies based on the independent variable in question. This means that government intervention matters, but it matters the most for specific policies, namely decommodification and labor market regulation, that seek to insulate citizens from the negative consequences of the market economy. Citizens living in countries where the government more actively intervenes in the market economy report higher levels of life satisfaction. The real-world impact of government intervention on whether individuals deem their lives satisfying is quite substantial.

Then it is examined whether the relationship between government intervention into the economy and life satisfaction varies across different groups of citizens. None of the results are statistically different from zero. This indicates that the effect of government intervention on life satisfaction is not moderated by individual income and that the four coefficients for government intervention affect the rich and poor alike. 

What may be the impact of this research?

This research can move one of the major debates in the scientific study of human happiness forward because previously, far too little attention has been devoted to theorizing about the range of social and political conditions that make life more enjoyable. In the focus on explicitly political conditions, there has been made an attempt to underscore the need for theories that more richly incorporate such determinants.

The market economy itself deserves renewed scholarly attention as a major factor in the empirical study of human happiness. The market system is a principal force determining the happiness of people and should be theoretically attended as such.