Paper of the Day
From Juan Non-Volokh, this humdinger:
BJØRNSKOV, et al, “The Bigger the Better? Evidence of the Effect of Government Size on Life Satisfaction around the World”
ABSTRACT: This paper empirically analyzes the question whether government involvement in the economy is conducive or detrimental to life satisfaction in a cross-section of 74 countries. This provides a test of a longstanding dispute between standard neoclassical economic theory, which predicts that government plays an unambiguously positive role for individuals’ quality of life, and public choice theory, that was developed to understand why governments often choose excessive involvement and regulation, thereby harming voters’ quality of life. Our results show that life satisfaction decreases with higher government spending. This negative impact of the government is stronger in countries with a leftwing median voter. It is alleviated by government effectiveness - but only in countries where the state sector is already small.
Semi-rhetorical question: If this sort of result keeps coming out of the data, as the data improves, how fast will statists develop grave methodological worries about happiness research? And how fast will limited government types start seeing something in it?
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Hehe. I recently did something similar, looking at the relationship between economic unequallity and happiness surveys. The correlation is *possitive*, the higher gini (more inequal) the more happy. Significant at 10%, or at 2% if you remove the outlier Zimbabwe.
Look, happiness surveys are junk, any moron would understand that after 10 minutes at looking at the Data. For crist sake Mexico has the second highest results in the world, a country where half of the population want to move the US.
The only reason the left uses them is that they have lost the debate with stringent methods, they are looking for “anything goes” economics to confirm their ideology.
Ps .
The US has 58% reporting as “very satisfied” , Welfare Paradice France 18%. Why isn’t the NYT crowd calling the debate closed?
Usual caveats about cross-national comparisons, aggregation issues etc., but…
It’s interesting that, as logGDP is included in the regressions, this effect should be independent of/over and above any damage government size does to national wealth. (Although all the coefficients on GDP are insignificant.) It’d be interesting to see whether you could dig deeper into what it is that’s driving the result: is it excessive regulatory interference just making life difficult, is there maybe some correlation between human rights and government size, or what?
You are probably already familiar with this study by Ruut Veenhoven, which finds:
Some of the government share numbers look extraordinarily low: Norway, France and Italy have 7%, 8% and 9% respectively. Does anyone know what the Penn data on government shares include/exclude?
New Zealand, the country I know about, has a reported share of 8%, whereas most comprehensive estimates are around 30%. I think you get about 8% if you exclude Education and Health spending, but they may have arrived at it in some other way. Either way, it’s going to significantly affect what conclusions you can draw from the analysis.
Does anyone else find the idea of a “rightwing median voter” to be sort of confusing?
And while I’m at it…
… their “IV analysis” to rule out reverse causation (unhappy people demand more government) seems decidedly thin. Their supposed instruments don’t seem to be exogenous at all - in fact they run them as controls in their main specification, and with the exception of logGDP get significant positive coefficients on them all.
“Eat The Rich” was a fun book along these lines.
I take “rightwing median voter” to mean that the median voter in a country is “rightwing” on a normalized scale, though (perhaps where you are heading) it is kind of mind-boggling that a normalized scale could be created for 74 countries.
odograph, I just find it entertainingly disorienting, because it’s clear what it means but the shifting contrast classes is a bit of mindtwist, like “tall people of below average height.”
I was probably the last guy alive to ever find this site I’m about to link, but just in case I wasn’t, here goes:
NationMaster.com
It’s extremely cool; you can generate all sorts of customized graphs ranking all nations (or selected nations) in terms of economy, taxes, lifestyle, military, etc.
Thanks. Nationmaster is fun. And I think they just made their fancier graphs free.
Big government and happiness
Over at Stumbling & Mumbling, Chris reports an eye-catching bit of new research that claims to demonstrate that “life satisfaction decreases with higher government spending”. And it does, if you believe that the countries with the lowest government s…
Lots of fun comments on a paper of which I am one of the authors! Just to make sure that people get it right: the government size variable measures the share of total income created within the government sector - i.e. the share that the government has direct control over. The measures that people here seem to know are all measures of government spending, which both includes transfers and services bought by the government from the private sector. The point is that spending doesn’t matter but´the share directly controlled by governments do.