Economic Freedom and Life Satisfaction: A Cross Country Analysis

CentER Discussion Paper Series No. 2012-038

27 Pages Posted: 15 May 2012

See all articles by Johan Graafland

Johan Graafland

Tilburg University - Center for Economic Research

Bart Compen

affiliation not provided to SSRN

Date Written: May 14, 2012

Abstract

This paper estimates the relationship between various sub-indicators of economic freedom and life satisfaction for 122 countries. The estimation results show that life satisfaction is positively related to the quality of the legal system and protection of property rights. For poor countries, freedom of trade fosters life satisfaction as well. Life satisfaction is independent from the size of the government and sound money and tends to be negatively related to low regulation. If the relationship between life satisfaction and economic freedom is controlled for income per capita, life satisfaction is independent from economic freedom. This indicates that the relationship between life satisfaction and economic freedom is mediated by income per capita.

Keywords: economic freedom, free trade, government size, income per capita, life satisfaction, regulation, respect of private property, sound money

JEL Classification: A13, D60, E02, O57, P14, P16, P51

Suggested Citation

Graafland, Johan and Compen, Bart, Economic Freedom and Life Satisfaction: A Cross Country Analysis (May 14, 2012). CentER Discussion Paper Series No. 2012-038, Available at SSRN: https://ssrn.com/abstract=2057751 or http://dx.doi.org/10.2139/ssrn.2057751

Johan Graafland (Contact Author)

Tilburg University - Center for Economic Research ( email )

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Tilburg, DC Noord-Brabant 5000 LE
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HOME PAGE: http://www.uvt.nl/webwijs/english/show.html?anr=516457&lang=en

Bart Compen

affiliation not provided to SSRN ( email )

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