Abstract

http://ssrn.com/abstract=830545
 
 

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The Bigger the Better? Evidence of the Effect of Government Size on Life Satisfaction around the World


Christian Bjørnskov


Aarhus University - Department of Economics and Business; Center for Political Studies

Axel Dreher


University of Heidelberg

Justina A. V. Fischer


Organization for Economic Co-Operation and Development (OECD); Stockholm School of Economics; University of Hohenheim

October 2005


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.

Number of Pages in PDF File: 40

Keywords: Life satisfaction, Government

JEL Classification: I31, H10, H40

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Date posted: November 2, 2005  

Suggested Citation

Bjørnskov, Christian and Dreher, Axel and Fischer, Justina A. V., The Bigger the Better? Evidence of the Effect of Government Size on Life Satisfaction around the World (October 2005). Available at SSRN: http://ssrn.com/abstract=830545 or http://dx.doi.org/10.2139/ssrn.830545

Contact Information

Christian Bjørnskov (Contact Author)
Aarhus University - Department of Economics and Business ( email )
Fuglesangs Allé 4
Aarhus V, DK-8210
Denmark
Center for Political Studies
Landgreven 3
Copenhagen K, DK-1301
Denmark
Axel Dreher
University of Heidelberg ( email )
Grabengasse 1
Heidelberg, 69117
Germany
HOME PAGE: http://www.axel-dreher.de
Justina A.V. Fischer
Organization for Economic Co-Operation and Development (OECD) ( email )
2 rue Andre Pascal
Paris Cedex 16, 75775
France
Stockholm School of Economics
PO Box 6501
Stockholm, 11383
Sweden
University of Hohenheim
Fruwirthstr. 48
Stuttgart, 70599
Germany
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