Who Benefits from Economic Freedom? Unraveling the Effect of Economic Freedom on Subjective Well-Being

World Development, Vol. 50, 2013

University of Heidelberg Department of Economics Discussion Paper No. 531

28 Pages Posted: 22 Dec 2013

See all articles by Kai Gehring

Kai Gehring

CESifo; University of Bern - Faculty of Economics and Social Sciences

Date Written: December 21, 2013

Abstract

Who benefits from economic freedom? Results from a panel of 86 countries over the 1990-2005 period suggest that overall economic freedom has a significant positive effect on subjective well-being. Its dimensions legal security and property rights, sound money, and regulation are in particular strong predictors of higher well-being. The overall positive effect is not affected by socio-demographics; the effects of individual dimensions vary, however. Developing countries profit more from higher economic freedom, in particular from reducing the regulatory burden. Culture moderates the effect: societies that are more tolerant and have a positive attitude toward the market economy profit the most.

Keywords: economic freedom, happiness, life satisfaction, government size, institutions, subjective well-being

JEL Classification: A1, F00, H1, I30

Suggested Citation

Gehring, Kai, Who Benefits from Economic Freedom? Unraveling the Effect of Economic Freedom on Subjective Well-Being (December 21, 2013). World Development, Vol. 50, 2013, University of Heidelberg Department of Economics Discussion Paper No. 531, Available at SSRN: https://ssrn.com/abstract=2370856

Kai Gehring (Contact Author)

CESifo ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

University of Bern - Faculty of Economics and Social Sciences ( email )

United States

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